A credit card is an exceptional financial tool. It allows you to pay for things you need and helps you build your credit in the process. But, if your spending goes out of control, the high balances and high finance charges accumulate to put massive stress on your wallet, and that can land you in a credit card debt.
If you see yourself getting into a credit card debt, it’s crucial that you try to get out of it as soon as possible. Here are 6 strategies that work to pay down your credit card debt easily:
1. Reduce your expenses
Review your monthly expenses and look for opportunities to trim them. The best way to do it is by tracking your spending. This will help you know where exactly your money is going. You can then decide which areas you should cut costs to save money. This simple strategy will help you control your spending, save money, and avoid taking on more debt.
2. Create a monthly spending plan
One way to get out of debt faster is to stop borrowing from your credit cards again. Make a budget. This will ensure that you stay within your means and maximize your ability to pay down your debts.
3. Use your savings to pay down debt
After you have saved for emergency and taken care of your essential expenses, instead of keeping the rest of the money as savings, you can consider paying your credit card debt with it. The money you’ll save on interest by paying your debts will be much higher than the interest you will earn on your money in the savings account.
4. Consolidate your debt
Debt consolidation strategy could work for you if you have multiple high-interest credit card debts. By debt consolidation, either by transferring the balance to another low-interest or 0% interest introductory credit card, or through a debt consolidation loan, you not only save on interest and pay off your debt faster, but you also will have to make a single payment instead of many.
5. Approach your repayment method strategically
Paying down your credit card needs a strategic approach. You can adopt one or a combination of these strategies to address your credit card debt:
- Pay more than minimum
If you can’t pay off the entire balance each month, pay more than the minimum due. By doing so, you will reduce the interest charged on your balance.
- Adopt the snowball method
You can consider knocking off the smallest debt first and then gradually tackling the larger ones. This method of paying off debt is called the snowball method. You start small, but keep going until you eliminate debt entirely.
- Consider the avalanche approach
You can also consider the avalanche method wherein you pay off the highest interest credit card debt first and then move on to the next. This approach is the fastest and cheapest way to get rid of credit card debt.
- Set standing instruction
To avoid missing your due date, you can automate your credit card payments by instructing your bank to make the payments on a specific date of the month.
6. Reach out to your credit card lender
If you are finding it difficult to make credit card payments, approach your lender to check if they can relax your repayment terms.