It can take a long time to pay credit card debt due to low minimum payments and high interest rates on credit cards. But just because he can taking years to get out of your credit card debt doesn’t mean it has to take that long in every situation.
In fact, there are four proven techniques that you might want to consider that could help you pay off your cards much faster than you ever imagined. Here is what they are:
1. Refinance using a personal loan
Refinancing to a Personal loan is one of the best techniques to become debt free as soon as possible. This approach helps you in different ways.
First, the interest rate on a personal loan is usually much lower than the interest rate on a credit card. Any time you can lower your rate, it will make it easier to pay off your debts by reducing the cost of borrowing. When less money is spent on interest, more money is spent on rapidly reducing your principal balance.
Second, personal loans have fixed repayment schedules. You decide the repayment term you want when you apply for your loan. Then your minimum payments are set to pay off the loan on time and faster. You can choose a loan with the shortest repayment term, with affordable monthly payments, and you will know exactly when you will be debt free.
2. Use a balance transfer card
A balance transfer is another approach to paying off your card as soon as possible. Balance transfer credit cards offer promotional interest rates of 0% when you transfer the balance of an existing credit card to them. The 0% rate usually lasts about a year to 15 months.
Although you pay a small upfront fee to transfer your balance in most cases, these fees are quite low compared to the annual interest rate on credit cards. It’s worth paying a small fee for a year or more of 0% interest. During this period, when the 0% rate is in effect, every dollar you pay will be used to reduce your main balance.
The downside of a balance transfer credit card is that if you do not do pay the full balance by the end of the promotional period, your rate will be higher. And minimum payments are usually not set to fully pay off the balance by the end of the promotional period. It will be up to you to ensure that your monthly payments allow you to repay the debt on time.
3. Negotiate your interest rate
In some cases, credit card companies will lower your interest rate if you ask them. They may be willing to do this if you indicate that you will otherwise transfer your balance, as they risk losing the account if you do. Or they may be willing to work with you on a payment plan if you tell them you’re having trouble paying.
Negotiating your rate to lower your interest charges also means more of your money will go to principal, allowing you to pay off debt faster.
Finally, you can also simply make additional credit card payments to your existing credit card. The more money you can put down each month beyond the required minimum payment, the faster you’ll pay off your debt and the less interest you’ll pay over time.
The right approach depends on your goals, but it’s worth exploring each of these options to try and get out of debt as soon as possible rather than being stuck in credit card debt for years to come.
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