How to Pay off Credit Card Debt Faster
What if you could spend less on credit card debt and still pay it off faster? These 5 sure-fire tips describe how.
- Tackle One Debt at a Time
If you’re anything like the average Canadian, you carry at least 2 credit cards in your wallet. Having more then 1 credit card can lead to credit card debt. Start by picking which of your two cards you want to pay off first and start getting out of credit card debt. You can make that decision one of two ways:
——>Pick the card that charges the highest interest rate and concentrate on paying off that card first
——>Pay off the card with the smallest balance.
- Consolidate Your Debt
Consider consolidating several of your higher interest rate credit card balances onto one smaller interest card. Talk to your bank about a “low balance transfer” and move your credit card debt onto a lower interest card. One note to be aware of is that balance transfer fees can be up to 5%, although the money you will save from the lower interest rate on your new card will be worth the one-time payment. Just be careful not to rack up new credit card debt on top of the debt you’ve just resolved.
- Stop Using any Remaining Cards
This may seem like an obvious tip, but it’s really easy once you have money freed up on your credit cards to start using them again, or to keep using another card, while paying down others. This is a dangerous game that can lead to more credit card debt. If it means cutting up your remaining cards, then so be it, but you should absolutely remove them from your wallet to keep them “out of sight, out of mind”.
- Prioritize your Spending
It’s time to get serious about your wants vs. your needs. You may want cable T.V. but do you need it? On average Canadians spend $100-$182 a month on cable. That’s money you can be investing in yourself and paying off your debt. That’s just one example of “trimming the fat” on your budget. Take a look at your recent bank statements and you’ll most likely find ways to cut back on spending and put more money towards your credit card debt.
- Refinance your Mortgage
If you own your home, congratulations! You may have enough equity built up to consider consolidating your credit card debt into your mortgage. If this option sounds right for you, just make sure you overhaul your budget to start allocating more money into your savings account. If you don’t, you may always be tempted to borrow more money whenever you “need” to. Remember, this is to be used once, as a solution to your current debt, not to create more debt.
Follow these five simple tips to pay off your credit card debt faster and you will be on your way to a brighter, debt-free future!