Easy Ways to Eliminate Credit Card Debt
Today more than ever, it’s important to put yourself in a solid financial position. One way to significantly improve your financial life is to rid yourself of any existing credit card debt. Digging your way out of credit card debt means changing your habits as well as the way you view money. If you have credit card debt, here are some simple steps you can take to eliminate it quickly:
Write down all your regular, committed expenses (mortgage, utilities, insurance, car payments, minimum credit card payments, phone, gym, cable, etc.), and track other variable expenses such as restaurant meals, entertainment and travel. Keep a spreadsheet detailing which cards you have, how much debt you have on each card, and their interest rates. This will serve as the foundation to your budget.
Set A Budget
Write down three ways you can cut back immediately, and cancel or downgrade some services. Divide your monthly discretionary budget into weekly allotments so you'll have a better handle on whether or not you're staying on track.
Pay Off High Interest Rate Cards
Invest any extra cash you have each month into the highest-interest card while paying the minimums on the others – this is the fastest way overall to lower your debt. Once the first card is paid off, you have even more extra cash, and should then apply it to the card with the next-highest rate, and so on, creating a debt payoff snowball effect. Each time you pay off a card, you will be left with a little more extra cash every month, and investing that cash into paying off the next card will help you pay down your debt much faster.
Improve Your Rates
Reach out to your credit card companies and see if you are able to negotiate a lower interest rate. If you can shave off even a percentage point or two, you can save hundreds as you pay off your debt. Be sure to mention if you have been offered a lower rate with a competing credit card, as some companies may be able to match that rate or offer you a better one.
Transfer Your Balances
If your credit cards have high interest rates, consider a balance transfer. Moving your balances from one or multiple high-rate cards to a card with a much lower rate can end up saving you big time. You’re essentially using a new card to pay off your old ones, but at one manageable rate. If you transfer your current balances to our low-rate Robins Financial Visa® Platinum Rewards card, you won’t have to pay a balance transfer fee or annual fees.
Stop Using Your Cards
The quickest and easiest way to eradicate credit card debt is to stop using your cards altogether. Store your credit cards where you won't have easy access to them – but don't cancel them. Plan to pay in cash whenever possible. If you continue using your credit cards while you try to pay off their debt, you are sabotaging your own efforts at debt elimination.
Make More Payments Per Month
Did you know that each time you make a payment, your average daily balance is reduced, which results in lower interest charges? Making two minimum payments each month can be your key to living debt-free much sooner and boosting your credit score.
Find Your Motivation
Will getting out of debt mean saving for a down payment on a house or being able to take a dream vacation? If you have a goal you’re saving for, write it down and create concrete objectives to keep you focused. You could even find a community or forum with other people who are making the same sort of changes in their lives to help keep you on track and committed.
Prepare For The Unexpected
Emergencies happen, with little to no warning, so it’s best to always be prepared. Rather than scrambling when unexpected expenses come up, start putting some money into an emergency fund. This way you will have a backup plan, rather than charging those unexpected expenses. Our Super Saver Certificate is a great way to start building your emergency fund for when life throws you a curve-ball.
Robins Financial Credit Union is committed to helping our members. Our Financial Calculators can help you set goals and plan for expenses, and our Money Manager tool within Digital Banking to help you set goals and track spending habits. Give us a call or stop by to discuss your options and see how we can help you save.