If you feel overwhelmed by your credit card debts, you aren’t alone. Research shows that 40 percent of Canadian credit card holders carry over their credit card balances with every passing month. These unmanaged credit cards debts hamper one’s financial progress and borrowing capabilities. Below are six strategies to pay off your credit card debt with dignity;
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Minimize the use of a credit card
You wouldn’t want to add more debts to what you are already struggling to pay, or would you? If you are to pay off your credit card fast, then you should stop using your credit cards and focus on repaying the existing debts. Besides helping you to reduce debt accumulation, freezing your credit cards makes you more conscious of your spending habits as you can only spend money that you already have. Sometimes is can make sense to take out another quick loan to pay off the credit card fast. To discover personal loan providers in Canada, visit Smarter Loans.
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Reprioritize your budget
A budget allows you to prioritize your spending. If you had anchored your existing budget on your credit card, you’ll need to reprioritize it so that it can fit to your new spending regimen devoid of a credit card. Most importantly, you should ensure that repaying your credit card debt features at the top of your new expenditure list.
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Exceed your minimum payment
While there is a set minimum amount that you should pay on credit card, striving to pay an extra percentage above the minimum payments lowers the interest payable on your existing balance on your credit card. Unbeknown to you, it’s these small savings that will help you repay your credit card in a record time. It is also important to know all the features of your credit card. Some are rewards based, some have cash or travel points and taking advantage of these can bring savings. At Smarter Loans, you can see a selection of credit cards available to Canadians today.
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Opt for a debt consolidation loan
If you have multiple credit cards that you are paying up, it’d be wise to consolidate the high cost credit card debts into a single, manageable loan. Debt consolidation saves you the risk of incurring penalties charged for late payments.
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Clear up debt with the highest interest rates first
If you have a credit charging you an 11 percent APR and a second paying 9 percent APR, it’d help to start by paying the high interest loan. This keeps the balances at manageable levels. If your credit cards are charged at roughly the same annual percentage interest, you can use the snowball approach where you pay up smaller debts before tackling the larger ones. Once you clear up the small debts, you will fill charged to tackle the larger debts. You can always refer to Smarter Loans to compare credit card interest rates.
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Use your savings to clear your debts
Do you have savings tacked away is some account? You could use those savings to pay your credit card and free up more funds towards your savings in future. While this option isn’t appealing, you will save more in the long run as the interest charged on credit is far higher than what you may earn on your savings. If you need help with credit or debt, don’t forget to check out Smarter Loans – Canada’s Loan Directory.
Bottom line
Paying a debt isn’t much fun. However, ascribing to good habits can help keep your debts in check. If you have already raked in massive credit card debts, ensure you never miss payment and work towards eliminating those high interest debts first to ease the buildup of debts.
