Credit Card Debt Blog

Do you have got tremendous credit card debt? You are certainly not alone. According to research, the average household in the United States have $7000 in credit card debt and pays about $1000 in interest each year! Throw in a late payment or two, or an over-the-limit charge, and that number skyrockets. Imagine what you could make with that $1000 if it weren’t being spent on interest.

Let’s conceive of for a minute that you have got $5000 debt on one credit card that is charging you 17.5% APR. Let’s also conceive of that you pay only the minimum owed of $25/month on this card. Guess what? You will never pay it off! The interest alone on this card is $73/month!

That agency that each calendar month you get additional and additional into debt. By the clip you have got got been paying on this $5000 for 10 years, assuming you have not used the card during this full clip period of time, you will owe $20,385! That’s over $15,000 in interest. If you triple your payment to $75, it will take you over 20 years.

So, what make you do? How make you get out of debt and usage that money towards other necessities, savings, and investments? Here are a few simple methods that you can utilize without having to travel to an expensive financial counselor.

Tip #1: Cut Up Your Cards

The very best manner to reduce your credit card debt is to stop using your credit cards! There is no need to have got more than than 1 card, so pick the one with the lowest interest rate and cut up the rest. The 1 you maintain should be deemed an ‘emergency card.” These are true emergencies, not mere inconveniences. For instance, buying a new television would not be an emergency, but renting a car in order to get to the bedside of a dying loved one would be. You can carry your emergency card with you, but don’t do it too easy to use. One good suggestion is to cover the card tape and paper and compose on it: For Emergencies Only.

Tip #2: Travel Your Debt

If you have got more than than one credit card payment, you may desire to see moving debt from a card with a higher APR to one with a lower APR. This will lower the amount of money you are disbursement towards the interest and get you out of debt faster.

Tip #3: Use the Snowball Principle

List all of your credit card debts, and the amount you are paying each month. Wage off the lowest amount first. Then utilize that money to begin paying off the second lowest amount. And then the adjacent and the next. Let’s expression at an example.

If you have got a $7000, $5000, and $2000 card with payments of $150, $125, and $100, you will complete paying off the $2000 card first. Once it is paid off, you take that $100 and set it towards the $5000 credit card. That agency you are now paying $225/month. You have got got increased your payments which will pay off that credit card sooner and will have you paying a batch less in interest. Once that is paid off, you apply the $225 to the $7000 card, making your monthly payment $375. This volition greatly accelerate the payment of this card, reducing your interest payments even further. When everything is paid off, you now have got $375/month extra to set towards nest egg or investments!

Tip #4: Prioritize Your Debt Repayment

One of the best ways to pay off your debts is to get quit of the highest interest payment first. Looking back at the sweet sand verbena example, you took the lowest and paid it first. If, however, the $2000 card had the lowest interest rate, you would desire to pay off the card with the highest rate first. This volition save you much more than in interest payments.

If the mathematics gets too hard here, don’t despair. There are many topographic points on the Internet where you can happen good debt reduction calculators. It is then just a matter of punching in your numbers and reading the report.

Tip #5: See Consolidation

If you have a home, you may desire to see consolidating your debt using a home equity loan. Since a home loan is a secured loan (they can take away your house if you don’t pay) you have got a much lower interest rate than you make on your credit cards. Paying a lower interest rate is always a good thing! Not only that, but the interest you pay on your home loan is tax deductible. This is NOT true for credit cards.

By following these tips, anyone can take control of and completely eliminate credit card debt.