Top 6 Ways to Pay off Your Credit Card Loan without Stressing Out

According to the New York Times, you may outlive your credit card debt if you are in your 20s or 30s which would be ideal for most of us. Unfortunately, wages and salaries aren’t always enough to cover the month’s spending, especially when emergencies occur. Credit cards and cash loans are always available and are now easier than ever to get. They can help make ends meet and cover large costs that you might not usually have to be concerned with. Once you’ve borrowed money, it’s time to pay it back. Here are some simple ways you can do that:

Pay Off the Card with the Highest or Lowest Interest Rate First

If you have maxed out multiple cards, there is an easy you can reduce both side by side. Here’s how – put all of your extra cash in paying off the card that has the highest interest rate first and just pay the minimum amount for the others. Once the former is paid off, redirect that cash to the latter and pay off each card accordingly. You can also look into a offers that you credit cards occasionally have… like 0% balance transfers from other cards. This is a great way to consolidate off of a higher interest card and enjoy the 0% interest while you work to pay the card balance down. You will need good credit to do this and you can always check and get credit report online free to make sure you are in good standing before calling your credit card companies.

So each time you pay off one card, you will have enough money left over at the end of the month to pay off the next. This will create a snowball effect that will help you pay off your debt in its entirety. Regular payments will also reduce the interest rates you have to pay each month.

However, if you want to pay off one card first, focus on the one that has the lowest balance first. This will take a load off your back but if you want to increase your credit score, then pay off the card that has a high utilization rate first. You can get that amount by dividing the overall limit on your card with the credit limit. The lower that rate is, the better your credit will be.

Freeze Your Cards

The best way to stop accumulating card debt is to stop using them completely especially if yours are maxed out. Pay for everything in cash and you will pay less or budget automatically. This is based on fact – consumers tend to splurge when they are paying with a credit card as opposed to a debit card or cash.

In other words, if you want to shave off that debt regularly, freeze your cards – literally. This will sabotage your efforts of making a purchase impulsively and go a long way in maintaining your credit.

Remain Organized and Streamline Your Budget

If you have multiple cards that need to be paid off, make a spreadsheet on them. Note down how much debt you have to pay off for each along with their interest rates as well. This will help you make a game plan so that you can tackle one issue at a time without getting overwhelmed. If you don’t know what you are dealing with, how can you deal with it?

After that, streamline your cash flow and maximize it by checking to see how much free cash you can take from your budget. This is the money you have left after you have paid for your groceries, rent and other necessary expenses. Plus, check which unnecessary expenses you can cut down on temporarily as you work to reduce your debt. Think of it as a diet that can help you reduce your financial burden.

Needless to say the more free cash you have to reduce your debt, the faster you can take care of it. Plus, the faster you pay off your debt, the less interest you have to pay on it. It’s better to lose some luxury expenses that can help you reduce interest rates and pay off your debt faster.

Pay Off More Than the Minimum

Do you pay off the minimum payment each month and pat yourself on the back that you are taking care of your debt? The bad news is that you are just making things worse for yourself. Making the monthly repayments is not the same as paying your debt. You will just remain in debt for longer because you are only paying off the interest rate on the card, not the actual money you own to the bank.

Credit card providers love card holders that only pay the minimum each month. The paid interest is more money in their pocket with the outstanding amount untouched. To see how much or how little progress you are making, take a look at your recent card statement.

As mentioned before, you can make a considerable dent in your debt if you divert all of your extra cash towards it each month. Eventually, you will save enough cash to make a comfortable nest egg for yourself that can take care of your retirement.

Consolidate Your Debt

Debt consolidation is one of the best ways to bring all of your debt in one place and pay them off at the same time with a single payment plant. Even if it means simply searching for something like National Debt Relief services, with time, hopefully you’ll find a solutiont to finally becoming debt free. This is usually charged at lower interest rates which make it an ideal option for people who are struggling to pay off multiple cards.

The process is not difficult but you will have to take out a debt consolidation loan to pay off outstanding debts. There are consolidation services that can specialise in a specific type of loan. For example, if you’re using payday loans quite regularly, you could use a payday loan consolidation service to bring your loans altogether. Payday loans usually have a high interest rate so the quicker it’s paid off, the better it is for you. Once you have done this, you will have way less paperwork to deal with and can manage payments easily enough. If you are interested in debt consolidation, then you might want to look at the services at debtconsolidationnearme.com. If debt consolidation is not on the cards for you, at least make 2 payments each month to reduce the interest rate you have to pay and to increase your credit score as well. Learn more tips and be free of that burden.

Don’t Close the Card

After you have paid off all of your cards and are reaching for the good scissors to hack them to pieces, stop. While it may be tempting, this is not a wise course of action. That’s because your credit score is based on how much you used your card or your card utilization ratio. The calculation is based on the rate of card use versus the amount of credit that is in your name. Once the card is closed, you will get less credit under your name which will increase your debt utilization ration which will not be good for your financially speaking.

A long credit history is a good thing especially if you can avail your credit for amazing benefits. So keep your paid card open, but just make sure that you pay it off each month fully so that you don’t end up in debt again.