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Getting Rid of Credit Card Debt Quickly

Getting out of credit card debt can free cash to start building wealth quicker. It may seem daunting to wipe out this debt as fast as possible but you can do it if you know how.

Credit card debt troubles many Americans, considering that 8% of it goes into delinquency annually. Not only can you take control of your credit card debt, but you can eliminate it if you implement the following strategies:


Do you want to get rid of credit card debt quickly? You have come to the right place. Read on to find out how you can do this.

Stop Using Your Credit Card

When you’re in a hole and you want to climb out, the first crucial step to take is to stop digging. That’s exactly what you should consider doing regarding credit card usage. If you stop purchasing with your credit card and keep paying it off, you’ll eventually get rid of credit card debt.

If you want to use your credit card for purchases, use it as a debit card. As soon as you use it, pay it off in full before your credit card issuer adds the interest.

Negotiate Your Credit Card Debt

Did you know that you can get lower interest rates and fees than you’re currently paying? Yes, you can by negotiating with your credit card issuers. The good news is that you don’t need to be an FBI negotiator to benefit from negotiation.

Start by comparing your credit card interest rates and fees with what other issuers are charging. Figure out what you want to achieve with your negotiations. Then, prepare credit card debt negotiating scripts.

After familiarizing yourself with your negotiating scripts, call the credit card company and begin the negotiation process.

Consolidate Your Debt

If you have multiple credit cards, it can be cumbersome to manage them. You can address this challenge by combining them into one credit card—a process called credit card debt consolidation.

Two common ways of doing this are the credit card debt balance transfer and tapping into your home equity:

● Credit card debt balance transfer involves moving all your credit card balances to a new, low-interest rate card. Do a cost-benefit analysis to ensure that it’s cost-effective to transfer your balances. Sometimes, the cost of the transfer might be bigger than the savings from the low-interest rate.

● Tapping from your home equity is about getting a home equity line of credit (HELOC). HELOC works like a credit card but your home serves as collateral (security), thereby making it cheaper than a typical credit card. Do a cost-benefit analysis before getting a HELOC to ensure it’s financially worth it.



Accelerate Your Credit Card Debt Repayments

Imagine that you have $20,000 worth of credit card debt at a 20% annual interest rate. If you pay $400 monthly, it’ll take nine years and one month to pay it off. The sad part is that you’ll pay $23,359.59 in interest alone.

What’s the impact of paying more monthly? Let’s say that you find an extra $200 each month and add it to your regular payment of $400. The repayment period drops to four years and two months while the interest declines to $9,436.10—a saving of $13,923,49.

You can find the extra cash to achieve this by cutting expenses on products or services you can do without or by finding a freelance gig. You could also pump a portion of your salary raise, bonus, or tax windfall into your debt repayment.



Conclusion

You can pay off your credit card debt as fast as possible. All it takes is to stop purchasing with a credit card, negotiate lower interest rates and fees, pay more than the minimum amount, and consolidate your debt.

While it's crucial to keep your credit card debt in check, you also need to take charge of your whole financial life, from retirement planning to tax and insurance planning.

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