Credit cards are a perfect way to make a quick buck or purchase, but they can also be a serious pain when the bills start piling up. If you have too many credit cards and are worried about going into default, you can’t always hope for a quick solution. Instead, you will need to take the time to address your credit card problems in a way that will allow you to eventually fix them.
Fortunately, you can always handle overwhelming credit card debts. The following strategies can help you get out of this sticky situation.
Utilize Powerful Payment Strategies
If you really want to get rid of your credit card debt, you have to be serious about it. You have to implement a game plan to ensure that you can reach this goal. This is where payment plans come in. The more concrete your repayment strategy is, the more viable it is for you to tackle your credit card debts.
You might want to consider the following options:
- Paying more than the minimum – Many credit card issuers only require you to pay the minimum payment every month. Typically, this is 2% to 3% of your balance. However, keep in mind that banks will also charge you with interest every payment period. Therefore, if you settle on the minimum amount, the longer you have to deal with these interests.
- Snowball method – The debt snowball method is utilized to motivate people to continue paying their debts. Specifically, this method will require you to categorize and prioritize your loans by their amount. Here, you will start with the smallest debt. Once you have paid that loan, you will feel a sense of accomplishment since you have finally cleared a particular debt. After conquering one credit card debt, you can focus your efforts on the next smallest loan. In time, the debts that you can clear will get larger and larger. Of course, you will do this method until such time you have no more debts.
- Avalanche method – The avalanche method is quite the opposite of the debt snowball method. The difference is that you will need to prioritize the debts with the largest amount. This will require a lot of dedication, as paying the biggest credit card debt is always a challenging task. However, the avalanche method provides faster debt-clearing results if you can do it right. Furthermore, it will help you save money as it is not that time-consuming. Also, clearing large debts will free you from expensive or high-interest rates.
- Automating payments – You also have the freedom to automate your debt payments. This one will guarantee you that there’s money being allocated for paying your dues and responsibilities. Automated payments will prevent you from incurring late fees. At the same time, it also veers you away from being tempted to spend your money on other stuff. You can combine this method with the snowball or avalanche method.
Try Debt Consolidation
If you have a good credit despite having overwhelming credit card debts, you might want to consolidate them in a single account. In this way, you will only make one payment every month and gradually clear the balance.
There are various ways on how you can do this.
- Zero percent balance transfer credit card – While it is true that applying for a new credit card to clear your credit card debts is counterintuitive, this one is an exemption. Always remember that a 0% balance transfer card will let you save money in the long run. It also helps in the consolidation process. You have to look for a card with a long 0% introductory period–at least 15 months. After that, transfer all your existing credit card debts there. Once you accomplish this, you will only have to pay one debt each month. You don’t have to worry about interests, either.
- Personal loans – You can also try applying or acquiring a debt consolidation loan–preferably a loan that has a fixed rate–to pay your credit card debts. This will still require paying interest rates. However, compared to the interest rates of credit cards, the interest rates of personal loans are lower. Doing this will help you save money in the long run. It is a good choice if your income is limited and the interest your credit cards are punishing you already. Fighting fire with fire is a considerable measure at this point.