Do you have over $ 25,000 in credit card debt? Here’s how to pay it back
Credit card debt is always difficult to manage, but as it grows, paying it off becomes much more difficult. If your total credit card balance is $ 25,000 or more, it will increase by hundreds of dollars each month due to interest. And it could cost you $ 500 or more just to make minimum payments.
Most consumers will take several years to get rid of their credit card debt and end up paying more interest than they originally charged. Even though it takes time to pay off such a debt, following a good debt repayment strategy will speed up the process and help you save on interest.
Start by negotiating the interest rates on your credit card
Many consumers don’t realize you can do this, but it is possible to negotiate a lower interest rate with your credit card companies. All you have to do is call the number on the back of your card and ask. It will help your cause if you have always paid on time.
Even if you aren’t successful with all the cards you have, any offer you get from a card issuer could save you hundreds, if not thousands of dollars in credit card interest when you pay off your balances.
Pay off credit card debt with balance transfers
The most cost effective way to pay off credit card debt is through balance transfer. Here are the steps to follow:
- Apply for a balance transfer credit card.
- Transfer as many credit card balances as possible to the balance transfer card. Start with the ones with the highest interest rates.
- Pay as much as you can on your balance transfer card each month until it’s paid off.
- Request another balance transfer card and repeat the process.
Now let’s see how it works in more detail.
First of all, you need a balance transfer card. This type of credit card offers an introductory 0% APR on balance transfers. This means that you can pay zero interest during the entire introductory period. These cards almost always charge a balance transfer fee, but it’s a small price to pay considering how much you’ll save on interest.
Explore the best balance transfer cards to find the right one for you. There are two things to look for here:
- The duration of the introductory APR at 0%: A longer introductory period gives you more time to pay off balances you transfer.
- The credit card issuer: Most card issuers do not allow you to transfer balances from one of their cards to another. For example, if you have balances on Chase credit cards, do not choose a Chase Balance Transfer Card, as you will not be able to transfer those balances.
You probably won’t be able to transfer all of your credit card debt to your balance transfer card. The amount you transfer, including fees, cannot exceed the card’s credit limit, and some cards also have their own separate balance transfer limits. That is why you will start by transferring your highest interest rate credit card debt.
Next, you need to pay off your balance transfer card as quickly as possible. Make only minimum payments on your other credit cards and put every penny you can into your balance transfer card.
Once you have fully paid off the Balance Transfer Card, you can request a new one.
By following this method, you will continually refinance the balances of your best value credit cards at an introductory APR of 0%. This will maximize your savings and the speed with which you will be able to pay off your debt.
What if you can’t qualify for a balance transfer card?
While balance transfers work well for credit card debt, they aren’t for everyone. Like most of the best credit cards, the best balance transfer cards are generally only available to consumers with good to excellent credit. If your credit score isn’t at least close to 670, you might have a hard time qualifying.
Debt consolidation loans are another option, and many lenders offer loans to borrowers who do not have high credit. You could get a loan that is large enough to cover all or part of your debt and use that loan to pay off your credit cards. Then you would pay off your loan in fixed installments and ideally at a lower interest rate than you had before.
You will need to find a lender with minimum requirements that you can meet, but there are many personal lenders available to suit many people’s incomes and credit scores. If you don’t have a high credit score, here are a few lenders that focus on borrowers with low to medium credit:
Go from deep debt to debt without debt
Make no mistake, there is no quick fix to erasing over $ 25,000 in credit card debt. Even with balance transfer cards, you’ll have to be diligent in paying as much as possible each month, and the process can still take years.
But this method helps you in several key ways:
- This greatly reduces the amount of interest you will have to pay.
- This gives you a clear goal to pay each time you get a balance transfer card.
- This allows you to reduce your debt and see the progress you are making as you pay off one balance transfer card after another.
If you can stick with it, this is the smartest way to pay off a large chunk of credit card debt.