Credit cards are great tools for both consumers and business owners. They allow you to make purchases without having to carry cash or write a check. But they can also be dangerous if you don’t pay your balance in full each month. In fact, Americans owe nearly $1 trillion in credit card debt with an average balance of over $7,000 per household according to statista.com. So what do you do if you’re drowning in credit card debt? How can you get out of it without borrowing more money? Here are some suggestions for how to eliminate your credit card debt without getting deeper in debt:
Make a plan to pay off the debt.
The first step to getting out of debt is making a plan. Set a realistic goal to pay off the debt in a certain amount of time and stick to it! To do this, you need to create a payment schedule that works for your budget. If possible, set up automatic payments so that every month when bills are due they’ll be paid automatically from an account with enough money in it (like a savings account).
Make sure not to borrow more money just because you’re trying to pay off credit card balances–that will only make things worse!
Decide what you can afford to pay each month.
Figure out how much income you bring in each month, and then decide what percentage of that money can be used to pay off debt. You might want to consider using the “50/30/20” rule: 50% of your income goes toward essentials like housing and food; 30% goes to paying off debt; and 20% is for fun things like entertainment or travel.
If you can’t do this right away, try another approach to figuring out how much you can allocate towards debt payments each month. Don’t forget to consider the interest rate on your debt: if it’s high, then paying off the balance will take longer than if it’s low.
Pay more than the minimum payment, but don’t pay so much that it jeopardizes your other financial goals.
The minimum payment is the least amount you can pay each month to keep your account current and avoid late fees. It’s often a small percentage of the total balance, so even if you’re paying this amount on time, it will take years to get out of debt and cost significantly more in interest..
The best thing you can do for yourself is to find ways to pay more than the bare minimum (but not so much that it jeopardizes your other financial goals). This might mean making an extra payment each year or taking on a side hustle like driving for Uber or Lyft during peak times–anything that puts more money in your pocket!
Apply for an interest rate reduction program, if possible.
If you have a credit card with a high interest rate, one of the best ways to get out of debt is by finding an interest rate reduction program. This can help lower your monthly payments and reduce the amount of time it takes to pay off your balances.
If you’re not sure if your credit card has an interest rate reduction program, contact their customer service department and ask. If they do offer this type of program, check to see if you qualify. Most issuers require that you’ve made timely payments on your account for at least six months before qualifying for an interest rate reduction program. If you do qualify, you may be able to reduce your interest rate by as much as half of what it was originally. This can save you hundreds or even thousands of dollars over the life of your balance, depending on how much debt you have.
Consider debt settlement or debt management
If you’re deep in debt, struggle to make your monthly payments, or want to pay back your debt in a reasonable amount of time, consider debt settlement or credit counseling. The former is when you or a debt settlement or debt relief company negotiates with your creditors on a reduced amount of the balances owed; the latter involves working with a credit counseling agency to pay off your debt. Credit counseling services offer debt management programs where they will work with your creditors to possibly reduce your interest and lower your monthly payments. However, they don’t directly reduce what’s owed on your accounts, unlike debt settlement.
Both methods can help you get out of debt faster and avoid bankruptcy, but it’s important to fully understand the companies that offer them. Many charge hefty fees for their services and don’t always provide the results promised. Do the research and make sure you are working with a company you can trust. For instance, ACCS has helped thousands pay off their debt, is BBB accredited, IAPDA accredited, and has hundreds of positive reviews and testimonials which you can easily find online.
If you’re struggling to pay off credit card debt, don’t panic. You have options. You can find a debt relief program that works for you and will help you get control of your finances again. In some cases, it’s possible to negotiate with your creditors to lower interest or get on an affordable payment plan — but only if you’re proactive. If you don’t take action now, it may be too late.
Request a Custom Debt Relief Plan to find out if our program is right for you. We will work with you on a custom financial plan that fits your unique situation. Our compassionate team of certified debt specialists is here to help you get out of debt and regain control of your finances.