Credit card debt is something that is experienced by millions of people in the United States and around the globe. In fact, in a report from the Federal Reserve in August 2017, Americans now collectively carry $1 trillion in credit card debt, a new US record. That is not a record to be proud of, and it is in the best interest of anyone carrying credit card debt to get it reduced or eliminated as soon as it is possible. Having high credit card debt can severely impact your credit score, making it hard for you to be approved for another credit card, hard to get a loan for a new car or house, and ultimately making it harder to pay off your existing debt thanks to higher interest rates.
While it may be stressful now, thankfully, there are many ways to help reduce your credit card debt. Here are just a few ideas to get you started on your way to financial independence:
Pay off your highest interest rate card first
This assumes you have credit card debt from more than one credit card, which is a solid assumption considering of those Americans who have at least one credit card, they possess, on average 3.7 credit cards (Gallup data, 2017).
You want to focus on getting the balance down on the card with the highest interest first, as ignoring this card will cost you a lot more in interest in the long run than another card. Take any available cash you have and throw it at this card as often as you can.
Pay off the card with the lowest balance first
A different strategy than focusing on the high-interest card would be to pay off the card with the lowest balance first. This works nicely if you have cards with very similar interest rates. Take any remaining cash you have and pay off this first card quickly, then move on to the next lowest balanced card and so on.
Call your credit card companies and try to negotiate a lower interest rate
While calling up your credit card company and asking for a lower interest rate isn’t guaranteed to work, it certainly doesn’t hurt to try. If you tell them your story about how you are actively trying to lower your credit card balances, you might be met with compassion and a potential lowering of your interest rate. If you still have a decent credit score, this strategy may work for you for some of your credit cards.
Once you’ve paid off your debt, keep it off by paying off monthly balances
You’ve spent so much time, energy, and money on eliminating your credit card debt, it doesn’t make sense to let it all snowball out of control again. Keep credit card debt under control by paying off the full balance every month.
Credit card debt is a stress on you not only financially, but also mentally and physically. It is in your best interest to reduce and eliminate this debt, by first learning how to properly budget your finances, and then finding a debt reduction strategy that works for you. There are many other debt reduction strategies than are listed here, so contact a financial advisor today to find out what strategy will work best for you and that will allow you to finally gain financial freedom.