If you own more than one credit card, chances are you have a rotating and increasing debt.
And with the principle of paying just a minimum installment every month, you end up increasing the debt, together with high interests.
Ok, may need to make an extraordinary purchase, such medical expenses or simple the grocery, because you lost the job.
Regardless of the cause, erasing the credit cards balance should be your top priority for your personal finance.
Here are several ways to eliminate your debt.
1. Target One Card at a Time
If you own multiple cards, it will be hard to erase all those debts at once.
Just target one card at a time, and focus your efforts on paying off its balance.
Once you’ve done it, you will feel better and even more motivated to erase the debt of the remaining ones.
This is indeed the best way to pay off credit card debt.
2. Ask for Lower Interest Rates
Asking does not cost anything. And often a simple phone call to the creditors will end up in getting lower interest cards.
You could get a percentage point or two shaved off, which will help you save up to hundreds of dollars annually.
3. Transfer your balance
Sometimes, it’s a smart move to transfer a balance from a card with a high interest rate to a card with a substantially lower one, as you can save hundreds of dollars a year.
But be careful: you should transfer a balance only if you’re willing to pay off the debt within a low-interest-rate window, together with paying your monthly installments on time.
Otherwise, your rate could dramatically increase, possibly ending up higher than the one you just got rid of.
4. Make Two Minimum Payments Each Month
Card issuers typically charge interest on a daily basis, so the sooner you make a payment, the faster your daily balance is reduced.
In case of emergency and if you’re on a tight budget, proceed on paying just the minimum due each month, then try to make the same payment again two weeks later.
Keep making a payment of the initial minimum-due amount twice a month until your debt is paid off.
Example: let’s say you charged $1,000 on a card with a 15 percent interest rate. If you make only the minimum monthly payment (which is about 2 percent of the balance), it will take more than 12 years to pay off the balance. But if you make an additional payment of the original amount two weeks later, you will be debt-free in less than one year.