Credit card debt can quickly spiral out of control, ruining your credit and limiting your options. Once you’ve found yourself with thousands of dollars in credit card debt, it might seem like an impossible task to pay off the cards while also providing for your other expenses.
Managing this debt and paying it down is possible if you set the right goals and use the correct methods. Here is how you can pay down credit card debt faster, so you can improve your credit and lessen your stress.
Pay More Than the Minimum Balance
If there is one thing you must do to start paying down your card balances, this is it. Even if you only have an extra $10 a month to add, it is still far better than paying only the minimum payment.
To understand why paying more than the minimum is crucial consider this example from Navy Federal Credit Union. Their Credit Card Minimum Payment Calculator shows that if you pay only the minimum payment on a $5,000 credit card balance with an interest rate of 18.9% and a minimum payment of 4%, you will pay $3,109 in interest over a period of 11 years and five months. By only paying the minimum amount it would take over four years to get the balance of this card low enough for credit repair.
Use SMART goals to break down your debt into smaller more manageable amounts. If you owe $5,000, make it your priority to pay $3,500 and get your balance down to where it is no longer hurting your credit (under 30% of your credit limit is the goal for credit repair).
$3,500 still seems like a lot, but it is a closer goal than $5,000, so you can reach it faster and get on the path to credit repair to undo the damage of carrying high balances.
Using a budget allows you to track spending and allocate your earnings. It is easy to lose track of small purchases here and there when you are not budgeting your spending. A budget will show you where all your money is going, so you can move around your spending habits and make room for higher payments toward your credit cards.
Pay Cards With High-Interest Rates Off First
If you have multiple credit cards, allocate the most funds to the cards with the highest interest rates. The more interest you are paying, the more debt you are going to have to have to pay off. If your goal is fixing your credit, be sure to keep those cards open once they are paid off, just stop using them until you have your debt managed and are ready to start building a good credit history.
If you are struggling to come up with extra money to tackle credit card debt, consider picking up a side job. Great options such as driving for Lyft or working as a personal shopper have become more accessible making it easier to earn extra income. If you work 4 hours driving a weekend, and make an average of $16.00/hour that is an additional $3,328 per year that could go to paying off your debt.
Now that you are on your way to paying off your debt it is time to start thinking about credit repair. Download our free guide to finding the best Dallas credit repair service.