Accumulating credit card debt has become a common practice these days. It has become so common that the practice is shown in movies and television as well very frequently. The good news is that you can get rid of your credit card debt that has accumulated due to excessive spending and high interest. While some people think that the best way to get rid of the debt is to transfer the balance to another credit card that is offering lower interest rates, thats really not a long-term solution. Credit cards with promotional 0% APR are also available, but they cant help you pay off your debt unless you have a proper payment plan.
When you have spent too much using your credit cards, even the lowest interest rates seem too high as your debt will keep multiplying and growing exponentially while youre unable to make room for credit card payments in your earning. However, if you really want to get rid of the credit card debt that you’ve accumulated, these are the best ways to go about doing that.
Debt avalanche is the term used for paying off your debt by starting with the debt that has the highest interest rate and going down the order in terms of interest rate. In simpler words, youll pay off the debt with the highest interest rate first before moving on to the second highest. This will help you save a lot in terms of interest payments. To clarify, youll still be making the minimum payments for all your credit cards, but if you have any extra cash or savings, youll be directing it towards the debt with the highest interest rate.
You can also try to attack your credit card debt by focusing on the one with the smallest principal amount. This simply means that you focus on the smallest debt and move up the order without paying any regard to the interest rates of the said debts. Its logic is simple; youll be able to pay off small debts much faster and as soon as you start getting rid of them, youll have extra cash for bigger debts.
However, keep in mind that both these methods require you to have some extra cash or savings that you can use to pay off your credit card debt. If you dont already have extra cash, the best way to make some is by budgeting and saving up or working freelance.
Both the methods can be useful if you are able to implement them properly and if you have enough extra cash to be able to pay off debts quickly. Depending on the amount of debt youve accumulated and the extra income available, youll be able to get rid of it in a few months or it could even take up to several years. Despite that, youll be realistically able to pay off credit card debts if you attack them one by one.