Whether you have an emergency expense, lost your job, or simply spent too much, racking up credit card debt is something that many people do at some point in their lives. In fact, the average credit card debt balance is $15,654 for an American household. Getting into credit card debt is easy, getting out can be difficult. Many find that by the time they get out of debt, they have paid thousands of dollars in interest. If you find yourself in credit card debt and way to pay it off, here are three tips.
Take Out A Personal Loan
One way to make the process of paying off your credit card debt more manageable is by taking out a personal loan in order to consolidate your credit card debts into one payment. This is a great option if you have credit cards with high interest rates and are able to get a personal loan with an interest rate lower than your credit cards. With a personal loan, you make monthly payments over a designated period of time until your debt is completely paid off. Interest rates for personal loans range between 10 percent and 28 percent on average.
Utilize Balance Transfers
If you have multiple credit cards with high interest rates, a personal loan is often the best way to consolidate your debt. However, if you have just one or two credit cards with high interest rates, a balance transfer to a new credit card account with a lower interest rate may help you get out of debt faster. With balance transfers, you can transfer the balance from one or more credit cards to your new card. These cards also offer an introductory period with very low or no interest charged on the amount you transfer.
Change Your Habits
When paying down credit card debt, it's very important to not generate new debt while you are paying down your current debt. This may mean making a new budget or finding a new source of income. Many find themselves in trouble when they accrue debt on their credit cards after doing a balance transfer or taking out a personal loan and find themselves in more debt than ever before. Your credit card debt can also have an impact on your credit score. It's recommended that you keep your credit card utilization under 30 percent in order to maintain a good credit score.
Paying down credit card debt can be difficult, but it's not impossible. In order to pay off your debt, you may want to consider taking out a personal loan or doing a balance transfer to a new card with a lower interest rate. The less you spend on interest, the more you can pay off the principal. It's also important to change the habits that got you into debt in the first place.Share
19 March 2018
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