Getting Out of Credit Card Debt
Eliminating credit card debt can seem like a daunting task, especially if your debt is in excess of $10,000. It may seem impossible to get your finances back on track. Fortunately, there are ways you can better manage your payments so that you quickly eliminate your debt. Making the minimum monthly payments may not be enough, and you may barely make a dent. However, try following these helpful tips to see if they can assist you in managing your debt.
Ask for Lower Interest Rates
A big problem many people have with paying off their debts is not necessarily the debt itself. A big headache comes from the interest rates that are accumulated on the owed amount. Occasionally, credit card companies will have interest rates in excess of 10 percent. This can add up quickly, and you may have hundreds or potentially even thousands of dollars added to your debt each year.
Interest rates can loom over your financial well-being. However, there can be a simple way of reducing your rate that most people do not realize. You should contact your credit card issuer and simply ask them if your interest rate can be reduced. It is important to remember that in order for this to typically work you will need a good credit score and a history of making minimum payments on time. The issuer can occasionally reduce the rate by as much as one or two percent. It may not seem like much, but it that can save you hundreds of dollars annually.
Utilize Peer-to-Peer Lending
This can be a somewhat tricky endeavor, so make sure you are using it correctly. One option available to individuals is to secure a loan from a peer-to-peer lender. You can be provided a loan in the amount of your total debt. You can pay off the debt from the credit card company, but now you have to pay back the lender.
While this may seem self-defeating, many alternative lenders offer much more attractive interest rates than credit card companies. To get these loans, you will need to show that you have a good credit rating and good-paying job. Many times, people can get loans up to $25,000.
Make Two Payments Every Month
Credit cards have a monthly minimum you have to pay off. The one payment a month you make can be completely undone by the interest your debt accumulates. Therefore, to make a more sizable dent in your debt, you should consider making two payments a month in the minimum amount. That means instead of making a payment once every four weeks, you would make a payment about once every two weeks. With this system, you can take years off the amount of time it would take for you to become completely debt-free.
There are plenty of reasons why you may have credit card debt. Perhaps you were out of work for a while or ran into medical expenses. It can be difficult to go through such a struggle and then end up with even more stress. Luckily, there are ways to get through this period of time.
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