Saturday, November 7, 2015

Is It Possible to Clear off Credit Card Debt Faster?

Of all debts, credit card debt is cancerous. With high interest attached, it seems to have no end. When you start paying it off, you will feel that it will take you a rebirth before you can manage to get out of the hole. I was in the trap once and know how much difficult it is to jump out of the quagmire.

Still it is possible! It may sound like a ray of hope for some while many will struggle to believe in the seemingly unbelievable talks. It’s not rambling talks as I have faced the problem and conquered the same. Even if you have mountain of debts, you can clear them all if only you dare to stick with a workable plan come hell or high water.

I racked up $2000 on my credit card and now I am a debt-free person. If I can, you can too!

Here are few simple ways by following which, you can pay off your credit card debts faster and guide yourself back to your lost financial freedom. But before applying them, do first thing first.

Open talks with Credit Card Company
You approached them while applying for credit card and this time, you have to do that but for a different reason – to get interest rate lowered. Many debtors are in fear of hearing a resounding ‘NO’ and so don’t request for interest rate negotiation. It is the worst case that you will hear ‘NO’ but what if they say ‘YES?  

Remember the company is also willing to get their debts cleared faster and most of them agree to accept a lower interest rate. And if your credit score has improved since your first taking the card, you have a greater chance to enjoy a lower interest rate.  

Now let us turn attention to the strategies

Pay more than minimum
Suppose you owe a lot on credit card but find a larger chunk of your money evaporating even before you can set aside the sum for payment. Repayment period will be dragged, slapping you with more interest to bear. Set aside a figure more than the minimum payable amount. Promise to yourself that you will not touch it and manage with the rest.

That will save you from impulsive purchase and skew a considerable amount towards credit card payment. If your payment exceeds the lowest bar, it will go towards lowering balance on credit card and small balance implies that debts will be cleared faster.

Consolidate & Conquer
Consolidation is also possible for credit card debts. If you have balance on more than one credit card and payable amount has taken a monstrous figure, get them compacted into a single one. It will facilitate payment and could also lower interest rate.

Start with lowest balance
It is famously known as snowball method as put by Dave Ramsey. First enlist your existing credit card debts in ascending order i.e. lowest balance first. Now clear the lowest balance first while maintaining minimum payment on others. The objective is to instill kind of confidence in you by getting smaller balances wiped out.

Clear card with highest interest rate
It is the most used method to pay off credit card balances. Focus on wiping out balances on high-interest credit card while paying off minimum figure on other existing ones.

There are multiple effective ways of eliminating debts on your credit card but most important is to choose one that you feel comfortable with and cling to it.
So, what strategy appeals to you most?

Editor’s Note: This article is contributed by Tina Roth: a personal finance blogger at PROFinanceBlog. She is commerce graduate and loves to write about money and finance management.