How To Pay Off Credit Card Debt – Credit card debts can be a nightmare that leaves you in constant worry of what the do. If this is the position you have found yourself, relax because you are not alone in this.
Even though owning a credit card does not have to be a way of life, if you currently have one and you find your self in a dilemma of credit card debt, here are some tips you can use to get out of it.
How To Pay Credit Card Debt Using the Snowball Method
Debt snowball educates you on how to pay off your credit card debt, and all den, ranging from the smallest balance to the largest.
- Start by listing your credit card debt from the smallest to the largest payoff balance. Don’t bother about interest rates.
- Try to make minimum payments on all credit cards except the smallest. Go for the smallest card with all that you have.
- Pay off the smallest credit card.
- Close the account.
- Use the money you were paying on the smallest credit card, and roll the same into paying off the next smallest balance.
- Pay off the second credit card debt.
- Close the account.
- Repeat this method, until you have the very last card debt paid out.
Which Credit Card Should be paid Off First?
It is advised you start paying off credit card debt with the smallest balance, as this will help you see results early enough. This positive results, will in turn fuel your motivation to do more.
Starting with the smallest credit card balance, helps you knock out the debt fast and keep the motivation to pay off the next credit card, and then the next and so on. On the other hand, if you start with the largest debt, you may lose verve and quit before you get close to the finish line.
Are you to keep your Credit Cards While Paying them off?
The answer is a straight no. You have to do away with all the credit cards you have, ensure you close the accounts once your balance has been paid off.
Other Credit Card Repayment and How they work
This is not a good option to consider when considering how to offset your debt. Why this is not a recommended option is because, the debt settlement companies charge you a fee and promise to negotiate with your creditors or reduce what you owe, but at the end of the day the only take your money and leave you to pay your debt. Do not consider this option.!!!
Home Equity Loans
If you decide on this option, your house, would be at risk if you happen not to pay back the loan on time. Not advised!!!
This loan, combines all your debts into one single payment. But the downside here is that the lifespan of your debt grows, which implies that you will stay in debt much longer. Note also, that the low interest rate that appears appealing up front will actually grow over time.
It is not a good decision to borrow from your 401(K) to pay off your debt. This is because you can get slammed with penalties, fees and taxes on your withdrawal.