Talk to a debt counselor toll free:800-300-9550
Our Clients Rate Us Excellent
Based on 3234 reviewsTrustPilot Reviews
If you'd like to get out from under that cloud of credit card debt a little more quickly there are some strategies that can help.
The first is to arrange to have the minimum payment automatically withdrawn from your bank account on the due date each month. This will at least eliminate those loathsome $25 late fees you're charged if you miss the credit card company' s deadline by just a few minutes.
The problem with this is that if you decide to pay more than the minimum you’d have to make a second payment. Unfortunately, inertia stops most of us from doing that. So, instead of setting up a minimum payment to the credit card issuer, set up an automatic payment from your bank to the credit card.
Then instruct your bank to send out the same amount each month and make the amount considerably higher than the minimum payment. Do this and you'll be forced to do something if you want to reduce your payment to the minimum amount, which you could always do if money is particularly tight in a given month.
Pay your credit cards more than just once a month
If you want to get rid of that credit card balance you don't have to make one big monthly payment. Instead, you could choose to pay the credit card company as often as you like.
You could use this to your advantage by setting up payments on a more frequent basis that will be easier for you to manage. This could be as frequently as once a week or once every two weeks.
Do you put everything on one of your credit cards in order to earn rewards and then pay off that big bill every month? If you use this approach – of paying on that credit card more frequently – there's an added benefit. This will improve your credit score because you'll be using less of your available credit. This is called your credit utilization ratio and makes up 30% of your credit score.
Switch those automatic payments to a debit card
You may be making automatic payments from a credit card each month to cover your utilities, services such as Netflix or Hulu, your health club membership or an insurance premium. A better option is to switch those charges from a credit card to a debit card. That way you'll be making the payments as they come due instead of using up some of your credit.
If there is some reason why you don't want to do this, you need to be very careful to make sure that when you pay your bill every month you cover those automatic charges. If not and you're making just the minimum payment, you'll fall deeper and deeper into a hole because it's likely that the minimum payment won't cover those new charges.
What will then happen is that your total balance will continue to just keep going up. And instead of getting closer to eliminating your credit card debt you'll get further away.
Consider a debt consolidation loan
If you owe on multiple credit cards one option worth considering is to get a debt consolidation loan and pay them all off. There are important advantages to this. First, you would have only one payment to make a month, which you could cover with an automatic withdrawal, so you’d never again need to worry about missing a payment.
Second, the payment on that debt consolidation loan is almost sure to be less than the total of the payments you're making on your credit cards.
You'd save money because the interest on a debt consolidation loan would most likely be in the neighborhood of 8% to 12% versus the interest rates you're paying on those credit cards.
Finally, if you're mot familiar with unsecured debt consolidation loans, be sure to watch the following video to learn both the pros and cons of these loans.