How to clean up credit card debt
If you have accumulated too much credit card debt, then your financial strategy was unsuccessful. Or maybe it was not at all? People often quite spontaneously spend money from credit cards, which leads to a logical result – accruing debts. However, do not panic. You need to reconsider your attitude towards finances and take urgent measures that will restore your well-being.
Priority on the cost of the loan
Each credit card has its own conditions. Different cards may vary the duration of the grace period, the presence of attractive bonuses, the percentage value. Many of these factors were important in the selection and design of the card. However, now, when repaying the accumulated debts, all of them are completely unimportant, except for only one thing – the value of your regular overpayment for using each card.
When repaying debts on the card, you should choose the card that costs you the most. It is necessary to make the maximum possible amount of funds. Having fully repaid the debt on this card, we close it and take a certificate from the bank that there are no debts on this account. This is a very important point! It is necessary not only to throw away the card, and not be too lazy to personally visit the bank, write a statement and make sure that an employee of the institution cuts the card with you, destroying its chip.
After that, choose the next most expensive card to maintain and close it. Act so until you figure out all the cards in turn.
If there is very little money and there is a lack of timely repayment of all payments, delays can become inevitable. In this case, you have to choose which of the debt consequences of delaying payments will be less painful. We immediately exclude the payment of the mortgage from the list of possible delays. It is not worth risking with such loans, because the bank may consider that the only option for it to return money will be to collect the apartment of the debtor. Losing your home is an extremely unfortunate scenario.
You should not also try to “save” on utility bills. You just turn off the light or water, and it dramatically reduces the quality of your life. Such circumstances will prevent you from working normally and earning, which will inevitably affect your ability to pay. Then servicing the remaining bills will become disproportionately difficult.
You can not refuse from the cost of travel and food. True, these two graphs can be significantly reduced.
Unsecured consumer loans, as well as credit cards, should be attributed to lower priority costs. In the worst case, due to delays in them, you are threatened with deductions from your salary due to the enforced collection, and to the extent allowed by law. However, you initially planned to repay all these debts.
Note that all of the above refers to a truly catastrophic situation. In other cases, you just need to look for opportunities for the fastest repayment of all credit card debts.
The most common cause of credit card debt growth is too high interest rates. To get a smaller amount of debt, you should try to lower the rate. Then it will become easier to pay off such a loan. It is also advisable to remove the possibility of making the minimum payment. After all, in case of financial difficulties, it is very tempting to pay the minimum (but the debt practically does not decrease).
This can be done by making an “exchange” of your credit cards for one consumer credit in cash. You will need to take a new non-target loan, due to which to pay off debts on all credit cards and close them. The new loan will have a lower interest rate, but the repayment schedule will be tighter. The goal will be closer, and all the money paid will go to a real reduction in debts.
What exactly you can not do if you want to pay off debts on credit cards
You can not pay a minimum. After all, while your debts will remain at the same level, and all deposited money just go to the bank. Therefore, the minimum amount can be paid only in case of priority repayment of more urgent debts purposefully chosen by you.
You can not increase the cost of credit cards. You need to take turns to pay off debts on the cards and close them, making sure the full settlement. You cannot deposit any amount into your account, decide what is enough for now and continue to use this card for payments in stores! That way you will never cover all your debts. Stick to a pre-selected plan and follow the goal.
Savings are your assistant. A life without debt is possible, and every dollar saved will bring you closer to this goal. Therefore, use budgeting, keep track of all expenses, effectively save money. All this will help to solve financial problems faster.
Picture Credit: mohamed_hassan