With fall around the corner and holidays approaching after that, it might be a good time to get serious about your credit card debt. As you see your debt shrink, you can look forward to a more enjoyable season of cheer.
To tackle your credit card debt this fall, follow these tips for repayment.
Give Your Credit Cards a Time-Out
If you want to pay back your debt, continually putting more charges on them won’t do you any favors. In fact, it can seem like an endless cycle. That’s why experts recommend you put your credit cards away, delete your credit card information from your online shopping hubs, and create a budget. Once you know where your dollars go each month, you can start putting money toward your credit card debt and allocating enough for your household expenses.
Add More, Owe Less
We all know that high interest rates are bad, and they’ve been higher than the norm for the last few years. That’s why putting as much extra towards your cards can not only help reduce overall interest but also help you pay down your debt faster. If that’s not possible, always make sure you’re paying at least the minimum.
Follow a Debt Game Plan
Following a plan of action can help you stay the course as you pay down your debt. Two options are the debt snowball or the debt avalanche.
Here’s the difference:
- Debt Snowball: When you use this strategy, you pay the minimum payment on all your cards except for the one with the lowest balance. On that card, you would pay as much extra as you can until it’s paid off. Rinse and repeat.
- Debt Avalanche: Much like the snowball strategy, you pay the minimum payment on all your cards, while paying extra on the card with the highest interest rate, repeating the process until your debt is paid off.
Try a Debt Management Plan (DMP)
To enroll in a debt management plan, you would contact a certified credit counseling agency, where a credit counselor will work with you and your lenders to help you pay down your debt. They will work with your creditors, consolidating your credit cards into one monthly payment at a reduced interest rate, all to be paid off in three to five years in a supportive environment.
Think Twice About Debt Settlement
Another option is working with a debt settlement company, but we don’t recommend it. Typically, they’ll tell you to stop paying on your cards while they negotiate with your lenders, leading to penalties and a hit to your credit score. Additionally, they often charge high fees, and there’s no guarantee your lenders will agree to settle, putting you in worse shape than you started with. Instead, follow the above steps to pay off your debt effectively and without negative recourse.