Are you someone who is saddled with rising levels of credit card debt? If answered yes, you need not fret as you’re not alone. In fact, as per reports it has been seen that the average American household owes more than $20,000 in the form of credit card balances. With increase in wages, consumer spending is also on the rise and although this has a good impact in balancing the economy, consumers are finding themselves knee-deep in credit card debt. Such saddled debtors are desperately looking for a best debt solution through which they can pay off a large chunk of their high interest debt.
If you too are looking for ways to seek debt relief, you’ve perhaps clicked on the right article. Nevertheless, it is important to note that unless you understand credit card debt and the compounding interest rate, you would never know how you keep on accruing debt when you are unable to make payments on your monthly bills. Read on the remaining concerns of this article to know more on debt repayment.
Credit card debt and interest rates – Understanding how they work
Before you try your best to get rid of debt, you should know how exactly credit card debt works and in what way the interest rates accrue. Every month you’re supposed to get a credit card statement where you will get the details of the price of whatever you have bought and the details of the retailers from whom you have bought. Though this depends on the kind of card you’re using, you would usually get 21 and 25 days from the date in which you get your statement.
The statement will then have a minimum payment and a new balance. The minimum payment is the least amount of dollars you can pay in order to maintain a good standing of your account. But if you don’t want to accrue hefty rates, you have to keep managing debt by paying off the new balance every month. Not paying this off will lead to an amount addition to the entire remaining balance. Therefore, experts always recommend you to repay your balance in full every month as interest rates on credit cards are sky-high.
Triggering off your credit card debt – Some essential tips
Are you ready to eliminate the burden of credit card debt once and for all? If yes, here are some of the practical ways in which you can deal with all maxed out cards and real steps towards debt elimination.
- Set a goal for yourself: It is rather important for you to set yourself some realistic goals which you really think you can achieve. The goal should include both credit card debt and consumer debt. While it is easy to accrue balances within a short span of time, it takes a lot of time to pay them back. Regularly monitor your progress and stay on the right financial track to be able to reach out to your goals.
- Freeze your credit cards: Credit cards are that necessary evil that has brought you down to this condition where you’re desperately trying to set yourself debt free. This is why, when it comes to getting out of debt, you have to first freeze your cards until you’ve completely been able to pay off the balances. Start paying for whatever you buy with cash and don’t take resort to credit at all.
- Jot down a monthly savings plan: Start off by jotting down a spending plan for taking care of your money. You can not only live within your means but you can also set a timeline about the time by which you expect to become debt free. You may seek help of an online savings calculator to know the exact amount that you should be saving in order to pay back your debts and also save for your future.
- Seek help of debt relief programs: There are several debt relief programs like debt consolidation, debt settlement and debt management. You have to choose such a program depending on the type of debt you’ve accrued and on the amount which you can pay back. However, ensure seeking help of legitimate companies where the representatives have your best interests in mind.
- Go for cash out refinance: If you have a home loan which you’re still paying, you can opt for a cash-out refinance loan and with that extra amount that you borrow, you can work towards paying off your credit card debt. The sooner you pay off, the sooner you can start repaying your mortgage balance.
Hence, we can well understand that credit card debt can not only spoil our credit score but can also leave you with spending sleepless nights. If you want to get back your calm, follow the steps mentioned above to bid goodbye to debts forever.