How to payoff credit card debt faster?

 

Hey there, I want to talk to you about something that affects a lot of people - credit card debt. Specifically, I want to share some tips and techniques for paying off credit card debt faster.
Now, before we get started, I should mention that most of these tips will apply to those of you living in the US. However, the general principles can be applied anywhere. So, without further ado, let's get into it.

The first thing you need to do is track your credit card debt. This will give you a good picture of where you stand. There are many tools to track credit card debt, but one simple way is to create a note on your computer. Login to each account and then write down the current balance. You want to get the current balance and not the statement balance.

Another way is to sign up for Credit Karma or Credit Sesame. These two services are free and they have detailed information on your credit history including usage, limits, payments, and accounts. You can click on creditkarma.com or creditsesame.com to get started

One other way is to use a tool like Mint. Mint will let you connect to all your accounts and pull information in real time. This is better than tools like Credit Karma because it is in real time. However, I should mention that there is a risk of exposing your login credentials to Mint. You can go to mint.com to get started

Once you have a number for how much credit card debt you owe, you can start planning on paying these off. I would start with the credit card debt with the highest interest. There are other techniques like the snowball method where you start with the smallest credit card debt, but personally, I would attack the one with the highest interest. Let's say you have a card with a rate of 20%. Paying it first is like technically getting a guaranteed return of 20% on your money. Paying off high interest credit card debt first will save you the most money.

One other thing to do here is to track your credit utilization ratio. If it is above 50%, you want to bring it down to below 50% and ideally below 30%. Credit utilization is one of the most important factors affecting your credit score, and the other is on-time payments.

Once you get your credit score into the good range, look for balance transfer offers. You want to get cards which offer you 0% balance transfer for a one-time balance transfer fee of 3%. This way, you can move some of your high interest debt over. Once you do that, keep paying off the remaining high interest credit card debt.

One thing you can also try is to see if you can get a personal loan at an interest rate lower than your highest credit card rate. There are a lot of online companies offering personal loans with much more favorable rates than credit cards. You can then pay off your high interest credit card debt with a lower interest rate personal loan. You can go to bestegg.com or lendingtree.com to find the best rates.

Staying on personal loans, one other option is local credit unions. Search their websites for personal loans and see if there are favorable rates available. These vary a lot from credit union to credit union, and most of them will require you to open an account.

Another option to get rid of high interest credit card debt is to look at your car loan. If you owe less than the value of the car, then you can technically refinance it to get the equity out as a loan. Some credit unions will give you up to 120% of the car's value. An example might be of help here. Let's say you owe $8k on your car, and the car is currently valued at $10k. You can refinance the loan for up to $12k, payoff the old loan of $8k and use the $4k to pay high interest credit card debt. Some things to consider here, one there might be a refinance fee. The rate on your new loan might be higher than your current car loan and it only makes sense if the new car loan rate is lower than your high interest credit card rate.

Coming towards the end here, so those are some of the techniques to pay high interest credit card debt faster. Stay out of debt, so that you can build wealth faster.