Credit cards also referred to as ‘plastic money’ have almost become a way of life now. However, along with the benefits of credit cards also come potential woes related to high interest rates and debts. The interest rate on a credit card balance is unassumingly high between 10-30% APR, making it all the more difficult to even pay down their debt.
However, there are certain guidelines that can help you getting your debt down. All you need to know is how to make a careful study of your credit history, your impending debt situation and make a strategic planning as to how to get your debt down. You may even seek professional help regarding the same.
1. The first priority before you make any moves is to make a list of each of your credit cards. Prioritize them as per their outstanding balance, interest rate, and minimum payment.
2. Streamline the credit cards in ascending order with the highest paying interest rate at the top, and the lowest is at the bottom.
3. Make a sum of the minimum payments required in a month. At the same time, you may even choose to pay extra (accountable payment) for paying off the debts quickly. Even small additions like $25 to $100 can make a difference towards getting you out of debt.
4. After you finish paying the minimum amount due for each card; check out the credit card (at the top of the list) with the highest interest rates and deposit the extra money that was generated in the previous step. Continue this process until all the credit card payments are complete.
5. While making your monthly payments remain constant regardless of your balance. You can also work towards ensuring that you are confident enough to target the most costly credit up front, so as to minimize the total amount of interest you pay.
6. If you have an excellent credit score and a history of timely payment, your creditors wouldn’t mind lowering your interest rate; however, be prepared to hear a ‘No’ as well.
7. You may also try for balance transfers. However, it is not as easy as it seems to manage balance transfer credit cards with low interest rates from 25% APR to a card with an 18% APR.
You may also find creditors offering 0% interest, i.e. interest free dealings; however, be careful not to be misguided by hidden cost and unreasonable repayment period.