Credit Cards are sure awesome tools and they do help a lot in case of financial emergencies and even for daily needs. But for people who are not very responsible about repaying their credit card bills regularly. No matter how great a tool is, if you are not responsible for its usage, it can cause a lot of harm. In the case of Credit Cards, it’s the same, it can put you under a huge debt if not used responsibly.
Once you are in debt, it becomes very hard to pay off the debt because it keeps on increasing every time a new bill generates. That is due to the addition of different fees and charges that keep getting added to the bill every now. These charges include interest rates which get added to the amount every time a bill is generated, then come to the late fee charges, and in the case of cash advances, there are cash advance fees as well.
All these financial charges keep on getting added until the whole outstanding amount gets repaid. This is very important to know that there can be other types of fees levied on the debt depending on the type of transaction or debt it was. There are many other factors that can also implicate your efficiency in paying off the debt.
How can you get yourself out of debt?
Credit Card debts generally occur when you keep on making transactions with your credit card and did not pay it back to the bank. Many ways can help you clear off the debt you have but it will need patience and responsible behavior. Below are a few tips to successfully pay off your credit card debt –
1. Understand your debt
Before taking any further action, it is really important to understand your debt. Review loan statements and bills and try to understand, what and how much you are paying. Your bill also includes the amount of interest you are paying for a particular sum or transaction.
You will also have to ensure that all your monthly bill is below your current income. Because it is very important to be able to make the necessary payments and make the ends meet.
2. Find a payment strategy or two
If you want to pay the debt, you will have to find a payment strategy or maybe two which can help you in paying off the debt eventually. Here are a few strategies which can be applied to reach your goal –
3. Pay more than the minimum due amount
Try to pay more than the due amount at a time. When your bill is generated, it is generated according to your expenses and EMIs, once the bill is generated, try to pay more than the balance mentioned in the bill. This will help you in keeping your payments up to date and also reduce your time of repayment.
4. Debt Snowball
Here in this method you will have to prioritize your debts by the amount and focus on the smallest debt you have. From the smallest to the biggest sum, you will have to make the repayments step by step. This will help you keep motivated as you will clear some of the debt you own and go towards the bigger one.
5. Debt Avalanche
This method is just like it sounds, an “avalanche”. This means you will try to start with the biggest amount to clear off the debt. This type of method is really helpful as you will be able to focus on the biggest problem first. Here by clearing off the biggest debt, you move towards the lesser ones.
6. Debt Consolidation
If you have a good credit score but it is overwhelming to have to make debt payments, you should consider consolidating them into one account. In this way, you will only need to make just one payment every month. This can be done by taking a personal loan and repaying all the debt and then repaying the loan step by step.
This will help you consolidate your scattered debt and you will be able to focus on repaying the debt in a particular direction.
7. Negotiate with lenders
If you are still struggling to make payments with the limited income you have, you can choose different measures. Which can include the debt sentiment strategy. Here you can negotiate with the lenders to reduce the amount of debt to repay a portion of the outstanding balance. One drawback of this strategy is that it will severely impact your credit score and it will also be there in your credit report which can hinder your chances of future financial aid.
Debt is a very big burden and a liability that nobody likes. A credit card, no matter how great of a tool it is, but it can also be fatal to your financial condition or health if not used responsibly. You will need to make sure that all the debt you have has been taken care of. There are many ways through which you can tackle your debt and gave things back on the right track.
A credit card is sure to greatly help in getting the best results in the prices and value back on your every expense, but it is important to use it very responsibly. The more responsible you are towards your credit card and its usage, the better your financial health will be.