How to eliminate credit card debt
How to eliminate credit card debt? Total credit card debt elimination will remove a significant financial barrier in your life. Follow these four action steps and you will soon be credit card debt-free.
Eliminating credit card debt Step 1. Get the most competitive interest rates
First, figure out how to improve your FICO score. The higher your FICO score, the lower the interest rates you are eligible for. More on Improving FICO score.
There are now several low-interest credit cards available only on the web – some of them even offer single-digit interest rates! For example, Nextcard offers an excellent 9.9% interest rate. You can easily sign up for it online and transfer your other balances over – all from the comfort of your home.
Eliminating credit card debt Step 2. Pay debt off using your savings
This solution is especially desirable when bank interest rates are low. Credit card interest rates are usually more than 15%, while bank interest rates hardly earn you more than 1% a year.
You might say that your savings give you a sense of security, but much of that is often false. With even the most conservative interest rate estimates, that means you would lose at least more than 14% each year by keeping your money in your savings instead of using it to stave off credit card debt!
Eliminating credit card debt Step 3. Pay more than the absolute minimum
The national average for credit card debt stands at around $9000. Even with an interest rate of 18%, if you were to only pay the minimum 2% of your balance each month, you would take almost 56 years to pay it off fully! Never underestimate the power of compound interest – interest charges can total to several times the actual price of that Macbook or ipod you bought a few years ago!
Therefore, always pay more than just the minimum amount; pay as much as you can afford each month. This will ensure that you get out of your credit card debt as soon as possible.
Eliminating credit card debt Step 4. Consolidate your credit cards
How to eliminate credit card debt quickly? Consolidate your credit cards! If your FICO score is healthy, banks will usually allow you to consolidate your card balances – such that they are all transferred to the account with the lowest interest rate. It is also much easier to keep track of your total remaining debt payments this way. Seeing everything at one go will motivate you to reduce the remaining balance as far as possible.