19 Proven Ways Of Getting Out Of Credit Card Debt

19 Proven Ways Of Getting Out Of Credit Card Debt
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Weighed down by Credit Card Debt?

Are you swimming in the ocean of debt? Are you finding it hard to get out of credit card debt problem? Are you facing a tough time Paying Off your Credit Card Debt -? If so, then without a doubt, you must be wondering how to get out of the debt? I will discuss some of the best  strategies to pay off credit card debt fast and get yourself free from the claws of debt. So, here I go –

  • Understanding the issue of debt – American debt crisis is far more serious than what it is being projected. As per 2015 American Household Credit Card Debt Study, the total debt owed by U.S. consumers for credit cards is $729 billion, for student loans it is $1.26 trillion, for mortgages it is $8.36 trillion, and for auto loans it is $1.1 trillion.

It has been seen that debt start to accumulate during the college days and at that time it is usually credit card debt, then accumulates with car loans along with student loans. Further, adding to the debt is being done by medical expenses, family expenses, and mortgages. In some cases, the debt has even followed people into the retirement.

Make sure you take some time out to see how your life is being affected by the debt. If it is a serious matter, then it is the right time have a plan to combat it. There is certainly a need to cement your fiscal situation. Mainly taxes, mortgages, and credit card bills consumes main part of your income.  So, before divulging various ways of getting credit card debt relief, allow me spill commonly used terms used to sort various debts and their types –

credit card debt stats 2016

source:  american-household-credit-card-debt-infographic

Some Commonly Used Credit Card Debt Terms You Should Know

  • Secured Debt –  This form of debt uses a collateral, it can be a car or your house.
  • Variable Interest Rate Debt – In this type of debt, the interest date is dynamic in nature and it can undergo a change over the tenure of the loan, such as credit cards.
  • Fixed Interest Rate Debt – This type of debt comprise of the same interest rate throughout the tenure of the loan, mortgage is the apt example for it.
  • Fixed Payment Term – The payment of this type of loan has to be made within a specific period of time. A student loan and a mortgage are two of its examples.
  • Unsecured Debt – This does not involve any collateral such as personal loans and credit cards.

Debt Types

  • Credit Card Debt – It is one of the worst types of debts. It is an unsecured financial liability towards one or more companies or banks that offer credit cards. There is no collateral involved and the interest rates are on a higher side as compared to other types of loans. What makes it worse is the penalties that you have to face on making late payments.
  • Medical Bills – Have you ever been hospitalized? Even though you haven’t, a normal visit to the emergency room the charges can really add up quickly. Yes, dealing with the medical bills can be an arduous task because you can’t say no the care you need, even though you cannot afford the bills.

In order to manage your medical bills is to have a closer look at the medical bills to check for the errors. Make sure you have used all the services for which you are being charged. Even if you have overlooked even one keystroke, suddenly you will be paying for the services you haven’t used.

  • Student Loans – It can be defined as the money owed on a loan that is taken to meet the educational expenses. Education debt can be commonly seen amongst the youth. Tuition costs are rising at a swift pace and the student debt has become the sole way in which they can pay for their college.

Debt Calculators:

19 Ways To Help You Eliminate And Get Out Of Debt Faster

steps to reducing credit card debt

1. List all your debts 

If you have a laptop or a personal computer, then this is the right time to make the most of it. It is one of the important steps that you will take towards freeing yourself from the debt is to jot down all the balances along with their exact APRs, debt balance, minimum payments, and your creditors. Knowing the minimum payments for every account will be an added advantage. You can use your credit report to compile a list of your creditors and debts.

list-all-your-debts

When you have the layout of all your debts, you get to know what is exact amount that you actually owe. This first step will lay the foundation for building a strategy/plan of making yourself debt-free.

2. Set goals for yourself

– Being goal-oriented, not just in fiscal matters but in other day to day matters as well, can really come handy. These goals actually allow us to break down the difficult things into small chunks that we can feel proud the moment we achieve them.

When you have a goal to pay off your debt, first you need to have an idea as how much amount you can actually dedicate for the debt repayment every month. Then, you will have a rough idea of when you will actually get out of debt.

3. Get a copy of your credit report

– Make sure you have a copy of your credit report. It is imperative that you have completely understood your credit report and above all, it is an important element when you are trying hard to pull yourself out of the debt. A credit report will carry all the debts from the banks and financial entities. It will come handy, along with other documents, while calculating your total debt.

your-free-credit-report

How to get copy of your credit report?how-to-get-copy-of-your-credit-reportcreditreportaccuracy_infographic_700x466

4. Debt Avalanche – A Debt Elimination Strategy

– The best part is that this method is almost similar to Snowball Method, but there is a slight difference in its approach. In this method, you will have to list all debts along with their interest rates. You will have to pay for the debt with the highest interest rate. Soon, your high interest rate debts will be paid off leaving only the debts with smaller interest rates. When you have only smaller interest rate debts, you will be able to pay them off at a faster pace.

5. Stop overspending

– You also have to ensure that you don’t increase your debt. Now, you must be thinking that it’s quite basic and everybody must be aware of this, but there are people who overlook this obvious thing and continue overspending, thus adding to your debt. Keep a check on your overspending and avoid taking more loans. Are you wondering how? No worries, have a glance at the below-discussed tips that you help you to work on your bad spending habits –

debt

6. Make A Switch From Credit Card To Cash

Do you like shopping? If your reply is in affirmation, then instead of carrying your credit card to the mall, you can switch to cash. Before you step out of your house, make sure you stack your wallet with enough cash and leave all your credit cards on the computer table. This way you will be forced to use the cash to shop for your favorite stuff whether it is gadgets, clothing, or daily groceries.

7. Prepare a list of things and stick to ’em

– When you are out of milk and you go out to the grocery store to buy it, I can bet you will return back carrying a large pizza or macaroni instead of milk. Well, this is what happens when you go out without a list. It is advisable you prepare a list of things that you need and ensure you stick to the products/things mentioned in the list.

Are you one of those individuals who end up doing more damage than good? Do you go on a shopping spree the moment you enter the shopping mall? Well, every time you go to the mall, you shop for unnecessary things. If the shopping mall is your weakness, make sure you avoid going there. It is not too much to ask and moreover this can be done easily. I am not saying that a shopping mall is everyone’s weakness but it varies from person to person. All I am trying to say is that you should try and avoid what makes you weak and try to stay away as much as you can.

8. Save petrol/gas

– Feeling tempted to have something better can, most of the times, lead to stretching of the budget a bit more and usually you end up spending more than your budget. When you already have one car and you don’t have a big family, then there is no point spending on another car when you actually don’t require it. Moreover, you also get to save petrol/gas.

9. Paying off your balances

– This is also one of the important ways in which you can get deliverance from your debt. Start off by paying your balances from low to high. You won’t be benefitted with this option as there is no inclusion of the interest rates. Let us move on to the second option i.e. paying off your debt from high-interest rate to the lowest and continue your way down. Try to make the minimum payment for every account in addition to the one that you want to remove in the first place.

I have seen so many people going for the credit card debt consolidation options and people who choose to transfer their balances to a new credit card having 0% APR for the introductory period. While seeing it theoretically, these options may work for you, but trust me you can’t consider them the best ones. I just don’t get it, who in the world will offer you an unsecured loan so that you can go ahead and consolidate your debt and a 0% rate, that is totally out of question.

10. Snowball Method – An Efficient Debt Repayment Method

This is one of the most preferred credit card debt debt repayment methods. You kick off the process by listing all your debts in a series i.e. from the lowest to the highest. Once you have prepared the list, you need to prepare a budget you will use to make the minimum payments on your debts, except the smallest one. Talking about the smallest loan balance, you will go ahead and make all the payments that you can till the time it is gone forever.

When you get rid of the smallest payments, you are only left with the larger loans. Now, while not making the payments for small balances, you will be in a better position to pay for the larger payments quickly.

Debt Reduction Snowball Calculator Excel Spreadsheet Free Download

Here’s the example in a table format to help you visualize the debt snowball process.

debt snowball chart

source: http://www.moolanomy.com/1302/dave-ramsey-debt-snowball/

11. Asking for lower interest rates

The quickest way to reduce or payoff your credit card debt is 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. Go on and sit across your creditor to finalize a reduced interest rate, provided you have an impressive credit score and you have a healthy record of making timely payments in the past. Some companies are willing to cut down the interest rate only when you make timely payments. Then there is an option of 0% balance transfer. As per this option, you are allowed to transfer your credit card debt to a credit card having 0% interest. But If you’re thinking about using this method to get your debt under control, there are some things you need to know before you.

12. Get Holistic knowledge of debt

Before you go ahead and make a plan for reducing your debt, it is imperative that you have complete knowledge of where you actually stand. I have asked so many people, can you believe most of the people replied me that they have a certain amount of debt. Let us assume Jonathan says he has a debt of $10,000 when in actuality he has a debt of $14,000. Be informed you will never be able to get out of debt when you don’t know where you actually stand. It is advisable to keep a check on your debt so that you can prioritize the things that need to be done.

13. Monitor your progress

I am sure you don’t want to be bothered by your credit card bills every single day, so it is imperative you monitor your progress. As per experts, you should revisit your progress every two months. Have patience and be practical in your approach, it took you awhile to accumulate the debt and it will surely take some to get rid of the debt as well.

14. Know the significance of credit score

Make sure you don’t overlook the credit score while you are making efforts to get yourself out of the debt (Maintaining a good credit score – Infographic). In order to highlight this, have a look at the statistics put forward by myfico.com for all those individuals having a score of 660 versus 760.

significance of credit score

  • Car Loan – You can expect an interest rate of 6.3% with a credit score 760. And can have an interest rate of 9.8% when you have a credit score of 660.
  • Mortgage – Currently, you can have an interest rate of 4.766% on a home loan only if you have maintained a brilliant credit score. On the other hand, if you have an average credit score, the interest rate will be 5.379%.
  • Home Equity – Interest rate of 8% of lower can be expected with an excellent credit score, but if you have fair credit then you need pay as much as 11% or higher.

15. Sell unnecessary things

Our American homes are usually stuffed with the things we don’t even use it on a daily basis but they are still lying in some corner of your home. Grab a pen and a paper and list down all these things, I am sure you will find only a few useful things worth keeping, rest are sheer crap and should go without any second thought. These are the things that have great market value if you sell them, get some money, and use it to payoff your debt.

Related Post : Credit Card Hardship Program   |   Student Loan Debt Consolidation

16. Don’t increase your debt

If you really want to see yourself out of debt, make sure you don’t increase your debt. Now, you will say it is pretty obvious but this is where people tend to take this for granted and don’t make any amendments in their ways. You need to stop spending unnecessarily and make sure you buy the things you will be using on a daily basis. Make sure you avoid taking any more loan.

17. Talk to a financial advisor

If you are dealing with debts, then talking to someone will do you a world of good and will also offer an emotional support. This is where a financial advisor will come into the picture. These advisors/counselors have years of experience in dealing with debt-related issues and using their years of experience these debt pros are in a better position to give you important credit card debt relief tips that will help you to get out of debt quickly.

18. Choose the method of Debt Negotiation

It is one of the methods that help you in debt reduction, the main thing here is that it is done with the help of a debt professional. In other words, it can be said that a debt negotiator assists you in repaying your debt by having a word with your creditors.

19. Find a reputed credit card debt relief company

Make sure you have taken your time in choosing a company that really helps you get out of the debt by choosing a credit card debt relief program. When you choose a reputed company, you can be rest assured you will have your money’s worth and you will get out of the debt quickly.

Remember that debt does not have to be with you forever. All you need is to be determined and adopt the above-discussed methods to get yourself out from the clutches of the debt in order to start living a happy life.

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