Using credit cards is an excellent way to build credit and open up the door to many benefits. But then the car breaks down. You get an unexpected medical bill. Your hours get cut at work. Or you just weren’t as careful with your spending as you should have been. Suddenly, your debt becomes overwhelming and you’re struggling to keep your head above water.
Credit card debt can be frustrating and frightening to deal with. But with the right credit card debt management strategies, you can take charge of your debt and clear a path toward financial independence.
The Best Credit Card Debt Management Solutions
While financial stress can be profoundly isolating, you aren’t the first person to experience credit card debt and you don’t have to reinvent the wheel to gain control of your finances. The following are tried and true credit card debt management solutions that could help you pay off your debt once and for all.
Pick a Strategy
When you’re in debt, creating a realistic repayment strategy is key. Two of the most popular strategies are the snowball method and the avalanche method:
The Snowball Method
The snowball method is a credit card debt management solution that focuses on paying off smaller balances first. By targeting debt in ascending order, you eliminate balances sooner and stay motivated over the long haul.
Because this strategy doesn’t prioritize paying off higher-interest cards, it may not save you the most money in the long run. But research shows that experiencing small victories and seeing accounts being paid off helps people stick with it. As Remi Trudel says in Harvard Business Review:
“Focusing on paying down the account with the smallest balance tends to have the most powerful effect on people’s sense of progress—and therefore their motivation to continue paying down their debts.”
The Avalanche Method
The avalanche method is another excellent credit card debt management solution that focuses on paying off cards with higher interest rates first. With this method, you make minimum payments on all other outstanding balances while applying remaining funds to the card with the highest APR.
The avalanche method requires a lot of discipline. Unless your highest APR card has a low balance, you won’t see results as quickly as you would with the snowball method. But by eliminating the most expensive debt first, you save more money and can get out of debt sooner.
Ask for a Lower Interest Rate
If you are a long-time customer and have a history of on-time payments, your credit card company may be willing to lower your interest rate. To do this, you’ll want to reach out directly to your credit card company with a solid strategy. Start by appealing to the customer service representative by explaining your history with the company. How long you’ve been a cardholder and how long you’ve been making timely payments are good things to mention.
If you receive pushback, ask to speak to a supervisor and maintain a polite yet persistent tone. Remember, you catch more flies with honey.
Consider a Balance Transfer
Transferring balances from high-interest cards to lower-interest cards could dramatically decrease your total debt and help you pay it off faster. However, make sure you have all the information before making any transfers. You may have to pay fees (typically 3-5% of the amount transferred) that could end up costing you more than you are saving in interest. If you are transferring your balance to a card with a special introductory rate, consider whether you can realistically pay off the balance before the rate increases.
You can also transfer your balances to a personal line of credit, which typically have lower interest rates than credit cards.
Explore Debt Settlement
If you’re struggling to pay off your debt in a timely manner, debt settlement could be a smart solution. Debt settlement involves negotiating with your creditors to lower the amount you owe and paying that amount off immediately.
While it is possible to negotiate debt settlement on your own, it can be a difficult and stressful process, especially if you’re dealing with multiple credit card companies. The best way to approach debt settlement is to have a debt relief professional negotiate on your behalf. These experts have years of experience negotiating with credit card companies to get you the best terms.
So where will you get the money to pay the settlement amount? A debt relief expert can help with that too. Often, they will set up a designated savings account where you’ll deposit the money you would have been using to make your monthly credit card payments. This will create a reservoir of funds to be used when settlements are reached. In other cases, they may offer a credit card consolidation loan that covers your negotiated balance.
National Debt Relief Goes Beyond Debt Settlement
No matter how you got into debt, there is a credit card debt management strategy that can help you get back on track. Not sure which approach is right for you? The National Debt Relief team can help.
Since 2009, National Debt Relief has helped more than 450,000 Americans pay off their debts, typically in just 24-48 months. Our debt relief coaches will work diligently to negotiate the lowest possible payments with creditors so that you only have to pay a fraction of what you owe. But we don’t just settle your debts; we set you up for success by teaching you the skills you need to make smart financial decisions during and after our program. Together, we can chart a course toward a brighter future.