Carrying thousands of dollars worth of credit card debt is a burden that many individuals experience. If you dread viewing your credit card statement, you’re not alone. A recent study found that the average US household carries $16,061 worth of credit card debt (Issa). It seems that as the cost of living increases so does the amount of debt that Americans carry. If you are serious about eliminating your credit card debt, take a look at the below credit card debt elimination strategies.
Don’t Use Your Card
This is one of the simplest strategies to eliminate debt, but it’s also one of the hardest habits to break. Many consumers are used to using their credit cards to purchase everything. If you want to eliminate debt, though, you have to put the card away for good. Don’t buy anything unless you have the cash to pay for it. This strategy will also help you think about your spending habits. Be honest with yourself and determine whether or not you use your credit card to purchase unnecessary items. Remember, the first step to eliminating debt is to not increase the amount of debt you carry.
Pay More Each Month
The way to eliminate debt quickly is to pay more than the minimum balance each month. Interest charges pile up each month, and unless you pay more than the minimum, you’ll spend years paying off your debt. When you add more money to your payment each month, you also end up saving money that would otherwise go toward interest charges.
Consider Your Repayment Options
- Snowball Method – Look at all of your credit card debt. Pay the minimum balances on each card except one. Each month focus on paying over the minimum balance for that card. Most people choose the card with the smallest balance as the one to focus on. Once the debt is eliminated move on to the next card and repeat the process.
- Debt Ladder Method – List each of your credit cards from the highest interest rate to the lowest interest rate. Then pay the minimum balance on every card except the one with the highest interest rate. Every month you pay more on this card to eliminate it quickly. This method is similar to the Snowball Method, but you focus on interest rates instead of balances.
Utilize Your Savings
Keeping money in a savings account is important—especially for emergencies. Yet if you have a lot of money saved and you owe a lot of credit card debt, it might make more sense to use your savings to eliminate credit card debt. The interest rates on your credit cards are likely high while your savings account interest rates are low. If you don’t pay off your credit card debt quickly, it will continue to increase. Take care of your debt first and then focus on your savings.