If you’re trying to figure out how to pay off your credit card debt, you’ve come to the right place. I’m sure you already know it’s a daunting task. But all you need to be successful is a solid plan of action.
You will also need perseverance and self-discipline to get rid of your credit card debt. But once you see your balances start to dwindle, you’ll have a surge of excitement that will help keep you motivated.
How to pay off credit card debt
Before you can choose a strategy, you need to gather information about your credit card debt. Make a list of your credit cards, including interest rates and current balances. Also, have a good idea of your credit score. Many of the major issuers offer a free credit score to their cardholders. There are even transmitters, including American Express and To discover, which offer free sheet music to everyone, whether you are a cardholder or not.
Depending on the specifics of your debt situation, one of the following five debt elimination strategies should help you pay off credit card debt:
— Avalanche of debt.
— Debt snowball.
— Debt Blizzard.
Balance transfer credit card
If you still have very good credit, you may qualify for a balance transfer card. These cards offer a 0% Annual percentage introductory rate for a period of time, for example 12 to 18 months. This gives you a chance to pay off your debt without paying interest.
But if you don’t have a high enough FICO score to qualify, you can consider a debt consolidation loan.
debt consolidation loan
If you have multiple credit card balances or different types of debt, you can combine them into one installment loan. With a debt consolidation loan, unfortunately you won’t get a 0% interest rate, but you will probably get a lower rate than your credit card APRs.
This is considered a personal loan, and if you have good enough credit, you may be approved. Shop around, though, and get the best rate you can afford.
Another personal loan option is to use your home equity a line of credit to pay off credit card debt. It is likely that the interest rate will be lower than what you pay on your credit cards.
Avalanche of debt
If you decide to settle your debt yourself, one option is called debt avalanche. You pay off your credit card balances from the highest APR to the lowest APR. The best feature of this method is that you save the most money because you get rid of the high APR debt first.
What if you need a quick psychological hit to stay motivated? Then try the debt snowball method. Here you pay off your balances from the smallest debt to the largest debt. You will pay more interest this way, so this is a significant weakness of this approach.
But I want you to choose which approach you will stick with. If the snowball method works for you, then go for it! And just so you know, it’s possible to combine the avalanche and snowball methods and turn this into a blizzard.
[ READ: Best 0% APR Credit Cards. ]
If you want the best of both worlds, check out my own creation, the debt blizzard. Start with the snowball method and quickly get an adrenaline rush. Then switch to avalanche to save more money.
If you think you can pay off the debt using one of the options listed above, choose your strategy and go for it. But what if your debt is insurmountable? If you feel like you’re drowning in debt and you can’t hope to have enough money to get rid of it, consider asking for help. Speak with a credit counselor from an agency accredited by the National Credit Counseling Foundation will help you clarify what you need to do next.
What is credit counseling?
If things are so bad that you think you can never overcome your mountain of debt, consider asking for help. You don’t have to go through this crisis alone.
You can find an accredited credit counseling agency through the NFCC. You will get a free phone session, in most cases, to help you choose the best debt reduction option. You’ll learn what your best options are, and it will help guide you.
Just in case you are worried that credit counseling will lower your credit score, you can stop worrying. Simply asking for help will not affect your credit score. Now, if you finally decide to enter a debt management plan or declare bankruptcy, your score will decrease.
But the most important thing right now is to stop the madness. You will get back on your feet and over time your credit score will recover.