STRATEGIES TO CONQUER CREDIT CARD DEBT
If you are struggling to pay your credit card balance in full you are not alone. In fact, the average Canadian has credit card debt of around $3,800. With high interest rates and with life’s unexpected expenses, it is very easy to find ourselves struggling to make the required minimum monthly credit credits payment let alone trying to pay off the balance in full.
Carrying a balance on a credit card ends up costing you more money as the majority of time the minimum monthly payment usually covers interest and makes little if any difference to your outstanding balance. Paying off debt takes time, discipline, and dedication; however with a proper plan you may be able to pay off your credit cards.
Here are 3 strategies that can help you tackle your Credit Card Debt:
- Pay off the credit card with the lowest balance first: For many seeing results quickly is a great motivator and it encourages them to continue working hard to reduce their credit card debt. With this method, your goal is to pay off your smallest debts first and then move towards the larger ones. By making minimum payments on your other debts, you are able to focus on making the largest payments on your smallest debt to pay it off as quickly as possible. Once you have paid off that credit card, move on to the next smallest debt and continue until you are debt free. This method starts to show results faster than other strategies and therefore can be more appealing and encouraging. However, keep in mind that the interest charges on your larger debts will continue to grow. If your credit cards have high-interest rates, you may want to consider the next strategy.
- Pay off the card with the highest interest rate first: The credit card with the highest interest rate will cost you the most in the long run. Therefore, paying it off first can save you money and help you pay down all of your debts faster. In this method you will put in all the extra cash you have on the most expensive card while making the minimum payments for the rest of your cards. Once that card is paid off, move on to the next card with the highest interest rate. This method is very efficient in the long term as you will end up paying less interest overall, thus saving you money.
- Pay more than the minimum payment: When you are struggling financially, it may seem impossible to pay more than the minimum amount required each month. Keep in mind that your minimum payment mostly goes towards the interest and not your principal balance. This means paying more interest and taking a longer time to pay off your balance in full. Each month try to pay a little more than the minimum payment. Remember, every extra dollar over the minimum payment applies towards the principal balance of your credit card, allowing you to pay it off sooner. Try to cut back your unnecessary expenses; habits like eating out or buying your morning coffee can really add up. These small spending sacrifices can really help in reducing your credit card debt in the long run. Instead, take that extra money and use it to pay down your credit card balance faster.
If you feel your debt load is too much to handle and you are overwhelmed by your current financial situation, we are here for you. At Sheriff Sole & Madej Inc. our commitment is to find the best solution for you. Learn more about Consumer Proposal and Bankruptcy. Call us at 1-844-482-3328 to book a free confidential consultation. We offer services in 12 convenient locations throughout the Greater Toronto area with staff members that speak over 7 different languages.