Do you want to rid yourself of credit card debt once and for all? If you do, you’re in good company. Americans now owe nearly $1 trillion in credit card debt, an average of $16,000 per household. That excessive debt, and the subsequent payments on it, can make it difficult to handle other monthly bills. It may seem impossible to get it paid off, too, but never fear.
You can pay off your credit card debt and keep yourself debt free. It can take some time, patience, and discipline, especially if you’re already deeply in debt. However, you most certainly can do it. Here are five simple ideas you can use to rid yourself of credit card debt forever.
1. Get help
If your credit card debt leaves you feeling hopeless and overwhelmed, you don’t have to go it alone. Terrific consumer credit counseling agencies exist, each ready to help. These agencies can analyze your outstanding credit card debt and help you make a plan to get it paid off.
Credit counseling agencies will often work with your creditors and address overdue payments, or help negotiate better terms on your outstanding debt. Try to find a nonprofit credit counseling agency; many of the services these agencies offer are free, and they can provide you with advice to help you get out of debt.
2. The debt snowball
Do you have multiple credit cards with varying balances? If so, the debt snowball technique may be a great strategy to pay them down more effectively. The debt snowball technique is a strategy in which you pay off your credit card debt from smallest to largest; using this technique, you have more money to commit to paying off each level of debt (the “snowball”) as you get a credit card paid off.
To use the debt snowball technique, simply organize your credit card bills from lowest to highest balance. Once you do, make the minimum payments on all of your credit cards except the lowest; pay as much as you can on the lowest credit card. Once that card is at $0, continue the process with the next lowest card, and so on, until all your credit cards balances are gone.
3. The debt avalanche
Are your balances increasing due to high interest rates on your credit cards? If so, the debt avalanche method may be a better strategy to pursue in paying off your credit card debt. Under the debt avalanche, you organize credit cards again; however, this time, you rank them from the highest interest rate to the lowest. Then, you focus on paying off the credit card with the highest interest rate first, while paying the minimum balance on the other cards.
Using this technique will help to minimize the total amount of interest you’re absorbing each month. It’s a great technique if you have high rates of interest on multiple credit cards and you’ve stopped using those cards to purchase additional things.
4. Debt consolidation loans
Debt consolidation loans are another strategy you can pursue to get rid of credit card debt. Using this strategy, you obtain a single loan that’s as large as your total amount of outstanding credit card debt. You then use that loan to pay off all your credit card balances. What remains is a single loan with a single interest rate and a single monthly payment.
Debt consolidation loans often come with lower interest rates and longer payment periods than credit card loans. This helps to limit the additional interest expenses and makes paying off the loan more manageable. In some cases, you can use home equity loans to consolidate credit card debt. Doing so may enable you to deduct the loan’s interest on your Federal income tax return.
5. Debt settlement
Another way to address overwhelming credit card debt is to hire a debt settlement company. This is a great strategy if you’re carrying so much debt that you cannot conceivably pay it off under any reasonable timeline.
Using this strategy, you hire the services of a debt settlement company. That company will normally direct you to cease making any payments to creditors and instead make payments into an account that the debt settlement company will use to pay off your credit card debts.
The debt settlement company acts as your agent, negotiating with each of your creditors. The company seeks to obtain terms on your behalf that make it feasible to get your outstanding credit card debt paid off, reduced, or forgiven.
Get debt free, and stay that way!
Paying off excessive credit card debt can be challenging, but you can do it! These five ideas offer very different options that you can employ to address debt and get it paid off. If you’re worried about those high credit card balances, choose the best option available to you and work hard to get debt-free as soon as you can.