A data released by the American Banking Association in 2018 reveals that there are more than 350 million open credit card accounts in the United States. This just shows how much people still find their credit cards useful.
In fact, roughly 76.9% of Americans own at least one to three credit cards and each American has an overall outstanding balance of $6,354. Americans alone owe trillions of dollars because of this.
Surely, having a credit card can help you survive each month, but when you start to think of all the debts you’re trying to pay off including the interest, you may want to just get out of your debts as soon as possible.
If you don’t know where to start, here are a few things that could help you pay off your credit card debt faster and even end up having savings.
- Establish your goal
There are different ways to look at why you should pay your credit card debt off as quickly as possible. First is because you want to get credited and improve your credit score. Another is because you want to keep your money instead of having to pay a bill that could have been prevented.
Whatever your reason is, you need to establish that you want to get out of debt without having to pay for your credit card for years. You should always track your progress so that you’ll always be motivated to keep on working on this goal.
Track your monthly expenses and know how much you can keep if you have less or none to pay for your credit card bills. That should motivate you well enough.
- Create a spending plan
There are people who don’t want to live on a budget. They would say that it makes them feel as if they are restricting themselves to live life the way they want to. However, with your goal in mind, you should actually see your debts as what restrict you live a better life.
Creating a spending plan enables you to budget and see where you seem to spend too much. This also lets you know where you think you can cut back on your expenses. Seeing your spending on a spreadsheet or a piece of paper will create a good impact on how you spend your monthly income.
Of course, it takes discipline to stick to the spending plan you created, but always keep yourself motivated by knowing how much you can spend when you’re finally debt-free.
- Start paying with cash
While paying with credit allows you to get potential cashback and perks, getting out of debt means the need to avoid using that piece of plastic inside your wallet.
It’s a proven fact that people tend to spend more when they make payments through their credit card. A study from Dun and Bradstreet reveals that people spend 12%-18% more when they pay through their credit cards in a fast food place.
When you start to pay in cash, you can immediately see and feel the effects of your spending. This would also let you be more in control of what’s left in your pockets. If you see that a certain amount is all you have left, then you are most likely to stick to your budget.
- Always pay MORE than the minimum
A common mistake the credit card holders have is how they think that paying the minimum is fine. They see this as an okay thing to do because paying the minimum doesn’t let them have negative credits. Yes, that’s true but if you stick to doing this every month, you’ll just end up having to pay credit card bills for up to 14 years.
Always try to double your minimum payment if you can’t spare an extra $100 each month. If you do this, you’ll more likely get out of your credit card debt way earlier than 14 years. We’re talking about only having to pay for your credit card for just roughly 5 years, according to NerdWallet.
If you can give more than $100 a month towards your credit, then you should be out of debt from your credit cards in less than 5 years. However, know that you should only give what you can. Paying the minimum if you’re really on a tight budget for a specific month is still fine.
- Consider Debt Consolidation
People are more likely to consider this option only if they are paying numerous debts that are getting hard to manage. This could be from credit cards, mortgages, car loans, and student loans.
Debt consolidation means you’ll need to take a personal loan that would pay the rest of your debt off. That’s basically paying your debts with another debt, but the good is that you’ll be paying fewer interest rates.
Other Options that You Have but Know Nothing About
If you really need some help with credit card debt payment options, you can seek the help of a financial counselor or adviser. After all, a good strategy will really depend on who you are, how much you earn, and your lifestyle.
Financial counselors tailor fits solutions that could really help you with your dilemma. What’s really important is that you know very well what you’ll get yourself into before anything else.