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Paying off credit card debt

On Behalf of | Nov 6, 2019 | Credit Card Debt

Credit card debt can sink financial solvency and lead to bankruptcy. There is currently $1 trillion of credit card debt in this country. But there are workable ways to pay off credit card bills.

The avalanche method starts with paying off the credit card rate with the highest interest rate first. After this card is paid off, the credit card with the next highest rate should be paid next. This should continue until all credit card debt is resolved. The avalanche method is recommended for reducing the most amount of credit card interest. While this method is being used, minimum payments must be made on all other credit cards.

Another method, the debt snowball method, pays off this debt by beginning with the smallest credit card balance. After the card with the smallest debt is paid off, start making payments on the card with the next highest balance. This should continue until all credit card debt is paid. This method is useful for building momentum by paying off the smallest balance first. Minimum payments should also continue with other credit cards.

Finally, a personal or consolidation loan is useful for paying off credit card debt and cutting interest rates to save money. With this loan, existing debt may be consolidated into an unsecured personal loan that is usually repayable in 2 to 7 years. These loans typically range from $1,000 to $100,000. Consolidation can cut APR rates that may be as high as 10 to 25 percent to personal loan rates that may be as low as 5.47 percent. This makes it easier to pay off this debt and reduce interest payments.

Also, credit cards have a variable interest rates which may change over the period of repayment. By comparison, personal loans have a fixed interest rate that assures that the same predictable payment each month. Lenders and interest rates may be reviewed online for personal loans. These may be funded within days.

Making sure one pays off their debt in a timely manner is important to ensuring interest rates don’t make the total amount overwhelming. An attorney can help provide protection against debt collectors. They may also take steps, such as bankruptcy, if credit card debt becomes unmanageable.