Five Ways to Get Out of Credit Card Debt

woman window shopping with credit cards

Depending upon how much credit card debt you have, being debt-free can seem daunting or even unattainable. Developing a plan is the most important first step to attaining a debt-free life. Without a plan, it can feel like you’re not making any noticeable progress. Here are five important steps to take to get rid of your debt.

Take stock of your finances

Before diving into a repayment strategy, it is important to take stock of your finances so you can have a clear picture of your debt. This is because a lot of people think they owe less than they actually do. For instance, if you have $9,000 in credit card debt, you owe closer to $11,000 when you include the annual percentage rate (APR) that will be added to your outstanding balance. If you have multiple cards, it is good to know how much debt you have on each. This will help you devise a payment plan for knocking out your debt.

Stop using your card

Have you ever looked at your credit card statement and thought, “Why is my payment so high, I only charged $XX this month?” The answer is interest rates. Depending on how high your interest rates are, your mole-hill of charges can turn into a mountain of a payment. By simply not using your card, your payments are paying down your balance and not just what you charged that month. Use cash or a debit card so you won’t be tempted to spend more than you can realistically afford.

One card at a time

If you are carrying a balance on more than one card, eliminating your debt can feel insurmountable. Set yourself small, more attainable goals to avoid being overwhelmed. One way to start is by paying down the card with the lowest balance first, without neglecting the minimum payments on your other cards, of course.

Transfer Your Balance

Proceed with caution on this one. While you may want to move a balance from a high interest card to a different card with a substantially lower interest rate for a promotional amount of time, after the promotional period is over the interest rate often increases to a higher rate than you were paying previously.

Balance transfers are a good way to combine multiple card balances into one, allowing you to make larger monthly payments. They should really only be done if you can commit to paying off the card before the low- or no-interest introductory rate period is over (usually 12-18 months), making your monthly payments on time, and not putting any new charges on the card. If you can’t commit to all of those things, you may end up doing more harm than good.
If you’re considering a balance transfer, be sure to look into the fee you may be charged to transfer your balance. Many companies charge a fee in the 3% to 5% range. If you’re transferring $10,000, you could pay $300 to $500 in fees! Use a balance transfer calculator to determine if you’ll save more in interest than you’ll pay in fees.  

Tip: We Florida Financial Visa Platinum card does not charge any fees to transfer a balance! Learn more about the We Florida Financial Visa Platinum card.

Seek help

Trying to get out of debt can be an intimidating and confusing process. It’s okay to ask for professional help. A credit counselor will help you create a repayment strategy, a budget, and provide you with tools so you can get your finances back on track.

The most important thing to remember is that this process takes time. Getting out of debt requires patience. Remember, you didn’t acquire your debt overnight and you won’t get rid of it overnight, either. Follow these steps and stay consistent and disciplined with your repayments, and you will reach your goals.

Sources:
https://www.creditkarma.com/advice/i/how-to-get-out-of-credit-card-debt/
https://www.realsimple.com/work-life/money/eliminate-credit-card-debt
https://www.creditcards.com/credit-card-news/help/8-steps-cut-credit-card-debt-6000.php
http://www.greenpath.com/ways-to-get-out-of-credit-card-debt