Eliminate Credit Card Debt - Apply Unexpected Funds to Payoff |
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Eliminate Credit Card Debt Article
| Apply Unexpected Funds To PayoffThe Ultimate Guide to Eliminate Credit Card Debt
One of the biggest problems today is how to eliminate credit card debt. According to the American Banker’s Association, the average family today carries about $8000 in credit card debt. This is because there is no emotional attachment to credit cards, and you can end up spending 12 to 18 percent more than using cash. People don’t attach the same value to non-cash substitutes and will wind up spending more freely.
Fortunately, there are some steps that help eliminate credit card debt. To get rid of credit card debt fast, try using the Credit Crunch method. First, jot down all your credit cards, as well as their respective balances, interest rates, and minimum payment percentage according to the last statement. You can usually find this in the fine print of your cardholder agreement or credit card statement. Typically, it’s about 2 to 2 ½ percent of your balance.
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Rearrange the list so that the credit card with highest interest rate is top priority and the credit card with lowest interest rate is at the bottom. Sum up the required minimum payments for all cards. Then, settle on how much money you can come up with every month, plus total minimum payments on all your credit cards, to apply to your credit card debt. If this seems impossible to you, it’s time to change your lifestyle and start budgeting.
Pay the minimum balance on every credit card for each month. However, for the credit card with highest interest rate, pay the money you decided to set aside to lessen credit card debt every month on top of the minimum balance. Continue for several months until debt for credit card #1 on your list (highest interest rate) is entirely paid. Repeat with credit card #2 (second highest interest rate) until that too, is paid off.
Then, do this on and on until you reach the end of your list. Crunch your payments up to the last credit card (lowest interest rate) or until you finished paying off all your credit card debts. It’s more beneficial to start with highest interest rate because higher interest rates could accrue interests more quickly, leading you to pay more interest rather than the original amount you owe.
Another option is to request a lower interest rate from your credit card companies. Getting a lower interest rate means you can erase credit card debt quickly, and without increase in payments. Or, you could transfer your balances to a low interest or 0 percent APR card. However, keep in mind that the low introductory rate offer expires after 6 to 12 months, so pay off the balances before offer ends.
Stop adding to the problem. If you are already deep in debt, stop using your credit card. Instead, set up a budget. As you go along the process of budgeting, you’ll be shocked to find out exactly how much is going to wasteful and unnecessary spending. Avoid impulse buying, and if possible, use cash instead of plastic in your next purchase. If you can’t help it, at least use a debit card to control your finances.
It’s not tough to eliminate credit card debt. Yes, it may take a lot of time and willpower, but eventually you’ll be able to be free of credit card debt, given that you stop abusing your credit card. And, don’t fall for the same trap twice. Using credit cards is tempting, but keep this experience in mind and surely, you’ll think twice about using that plastic. Go for cash.
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