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- 1. Start from the card balance with the highest APR
- 2. Pay off the lowest card balance
- 3. Make a budget that works for you
- 4. Be realistic about your options
If you also have many credit cards, that can also create some more complications for you. Whatever your situation is, there are some tips that will ensure that you are paying off your credit card debt sustainably and put you on the route to financial freedom and living debt free.
According to a report by Experian, the average customer owes an average of $5,897 in debt.
Here are some tips to help you get out of credit card debt.
1. Start from the card balance with the highest APRCredit card debt snowballs easily because of the interest rate on the debt. Check all your balances and see how much it costs you in interests to manage each one. Focus on paying off the credit card that has the highest annual percentage rate.
This will reduce your overall debt as the snowball effect is mitigated. While you are paying that off, make sure you meet the minimum payments on the other cards so that you don’t get more interest. Do this until all your high-interest cards are paid off.
2. Pay off the lowest card balanceThere’s a lot of encouragement that comes with seeing your hard work in paying off your debt yield a result. By taking off the smallest credit card balance that you owe, you feel a sense of accomplishment and your attention is less divided.
Paying off a credit card feels good and encourages you to keep going. With the low balance cards off your list, you can then begin to pay off the ones with the large balances.
3. Make a budget that works for youWhen you’re paying off credit card debt, you need to make sure that you are also being financially sustainable. You can make a budget using an app or good old paper and pencil to plan all your income and expenses.
Find ways to reduce spending money and put those towards the repayment column. Budgeting helps you track your money in a way that ensures your lifestyle isn’t adversely affected.
4. Be realistic about your optionsRegardless of how quickly you want to be debt-free, you should understand that it may not be that easy. If you are facing a lot of credit card debt, you must be realistic about how much you can pay monthly and how quickly you can make the payments.
When you have a windfall, put it towards your cards, when you are tight, pay the minimum balance. Stay away from large, flashy expenses that may increase your debt load.
Getting rid of credit card will not only allow your credit score to improve, but also give you peace of mind.