Anyone who has dealt with credit card debt will tell you how quickly it can become a downward spiral. From 2021 to 2022, credit card debt has reached 100 billion nationwide, and inflation is not the only reason. The hiked interest rates are pushing borrowers into more debt which many have no idea how to manage, let alone pay off. The journey to be come debt free is hard, you may take stumbles and set backs but the reward is overall worthwhile. But to get there you will need some help.
3 Strategies To Promptly Clear Your Credit Card Debt
Clearing off your debts with a minimum amount will take a while. If you want to become debt free fast, you will need to restrategize. That means implementing techniques that will accelerate your payments. These are three strategies that can speed up your credit card debt payoff.
1. Debt Consolidation
The idea of this debt payment plan is to combine multiple credit card debts into one account. That way, you will have one debt with ideally a lower interest rate than the previous debts. There are calculators you can use a calculator to estimate your new interest rate to when you choose to consolidate your debt.
Why It Works
Borrowers dealing with high-interest rate debt find relief in this technique as it offers a possible reduced interest rate. With only one debt to deal with, this strategy heightens the focus of repayment.
2. Debt Avalanche
This technique prioritizes debt payment based on the interest rate. The debts with the highest interest will be the first target, while the rest receive only the minimum amount requirement. You will then direct any extra funds allocated to debts to the first debt. Once the first debt is paid off, you can focus on the debt with the second-highest interest rate.
Why It Works
Because it is financially focused, this plan is the fastest and one you can save the most money from. Giving attention to the highest rate of debt means as payoff progresses, you will have less interest accumulating. You can direct the monthly interest to pay other debts when the first is paid off, reducing the debt-off period.
3. Debt Snowball
The concept of this payment plan is to start small, so, list your credit card debts from the smallest to the largest. Target the smallest debt while paying the minimum repayment on the other debts. Any extra amount rolled out will be topped up to the repayment of the smallest debt. Only when the debt is paid off(smallest) will you move to the next debt on the list.
Why It Works
The motivational boost within this technique is what makes it effective. Working your way up from the smallest, you will quickly notice the progress of your debt retirement plan. Because it’s also easy to implement, anyone can successfully adopt this technique into their financial routine.
The Bottom Line
Being debt free is among the luxuries very few people can afford in 2022. The good news is you can crawl out of the mountain of credit card debt using either of the above methods. Analyze your financial situation and determine the best cause of action to begin paying off your debt.