Credit card debt is an issue that affects thousands of Americans. The burden of large monthly payments and interest rates is a stressful way to live. Below, we outline 4 easy ways to pay off credit card debt quickly and easily.
1. Pay off the Card with the Lowest Balance
Increasing your payments on the credit card with the lowest balance while continuing to make payments on the rest of your credit cards will help you see the results of this strategy sooner. Once you pay off the card with the lowest balance, you can move onto the card with the next lowest balance.
This strategy is effective because it is easier to pay a $500 balance than a $2,500 balance, and you’ll keep yourself motivated by tackling your debt one credit line at a time. Paying a credit card bill in full feels rewarding no matter what balance you began with, and every credit card bill paid in full is one less minimum payment you have to keep up with monthly.
2. Get Specific on Wants v. Needs
Write down a list of your monthly spending needs v. wants. This way, you’re able to see areas where you can cut spending. Housing and utilities are certainly needed, therefore they are a non negotiable within your budget. Although food is a need, going out to dinner would fall under “wants.” Reduce food costs by cooking meals at home, or perhaps having one designated day of the week where your budget allots this spend. Bonus: this allows for finding new recipes to make, or inviting friends over for a meal. There are ways you can get creative with your budget, and enjoy yourself paying off debt.
3. Pay More than the Minimum
If you stick to paying the minimum balance on your credit card, it will take you a lot longer to pay off your debt. Additionally, this does not factor in the interest rate, so in turn, you end up paying more than what you originally owe. Simply put, the smaller your balance, the less interest you have to pay.
If you can commit to meeting the minimum requirements, that’s great. However, a better tactic is paying more than the minimum. This not only boosts your credit score, but this is especially important when you think about your options once debt is paid off. According to Bruce McClary, Vice President of Communications for the National Foundation for Credit Counseling, “…try to pay double the minimum payment, if you can afford it. If that’s a no-go, consider paying $10 or $20 more than the minimum.”
As previously discussed, maxing out a credit card hurts your score because it drives up your credit utilization ratio. Having a maxed-out card also makes you look bad if you’re applying for another loan.
The smaller your balance, the less interest you have to pay. It can be as simple as that.
4. Switch to Cash
Don’t add to your debt by continuing to charge expenses on your credit card. Paying in cash prevents you from accumulating more debt and can help you spend less overall due to the psychological act of handing over physical bills. It also forces you to plan ahead and prioritize purchases.
Researchers at MIT came across some remarkable findings when conducting research on people using cash instead of credit cards. “People who were told to use a credit card instead of cash were willing to pay more for purchases. Another study [conducted] found people paying with cash were more likely to focus on an item’s cost, rather than its benefits.” We suggest taking cash out, and monitoring your spending habits. Track how much you spend after doing this, and maybe consider taking cash out for spending instead of using your credit card.
At Assure Debt Solutions, we work directly with creditors to lower your overall unsecured debt obligations. Each plan is tailored to your specific situation and needs. We work together as a team to achieve debt resolution. We are passionate about helping people take back control of their finances and ultimately their lives. Contact us today.