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If you’re wondering how to get rid of credit card debt, consider a balance transfer card or debt consolidation. Learn more about how these methods work. (Shutterstock)
Get Rid Of Credit Card Debt Without Paying
Credit card debt is common for many Americans. According to TransUnion’s latest report, the average consumer had $5,805 in credit card debt in the fourth quarter of 2022. The combined credit card balance in the U.S. during that period was $930 billion.
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If you’re wondering how to get rid of credit card debt, find out what steps you can take to get rid of it. You can use a balance transfer credit card or a credit card consolidation loan, among other options.
A balance transfer credit card allows you to transfer one or more credit card balances to a new credit card. Some debit cards charge an origination fee, which can be a fixed amount or a percentage of the amount you transfer. But many balance transfer credit cards have 0% APR periods of up to 15 or 18 months. During this time, you can pay off your credit card debt without paying interest.
After the introductory period is over, the interest rate on the credit card will revert to the regular rate, which may be higher than what you are paying on your current credit card. So using the grace period will help you pay off all your debts and avoid interest.
Also, make sure the transfer fee is too high to transfer your credit card balance to a new card. If you’ve decided a balance transfer credit card is right for you, you can start comparing cards – many major credit card issuers offer balance transfer cards.
Chart: Americans Far From Maxed Out On Credit Card Debt
A credit card consolidation loan or debt consolidation loan allows you to take all of your credit card balances (and even other types of debt) and consolidate them into one personal loan. This loan has a fixed interest rate and new repayment period. Instead of dealing with multiple monthly payments and different interest rates, you’ll have monthly payments.
You can get credit card consolidation loans from online lenders, banks and credit unions. Because personal loans have lower interest rates than credit cards, debt consolidation loans can be ideal for high-interest credit card debt.
When you lower your interest rate, more money from your payments goes toward paying down your actual credit card balance. However, it is important to consider the loan fees and payment terms. Many personal loans come with origination fees (the cost of processing your loan application) and prepayment penalties (fees for paying off your loan early). The cost of these payments may be higher than the interest on the loan. Additionally, if you have a longer repayment term, you will receive a lower monthly payment but pay a higher interest rate over the life of the loan.
If you want to pay off credit card debt faster, you can always negotiate with your credit card company. Check your monthly statement to see what the current APR is for the credit card, then call your credit card issuer.
Seven Steps To Get Rid Of Your Credit Card Debt For Good
You can ask if they are willing to lower your interest rate or create a modified payment plan. You may be able to arrange a debt relief agreement where you can temporarily stop paying (although interest may still accrue). A long-term payment plan is another option – if your credit card company allows it, you can negotiate a payment plan with little or no interest.
The best time to negotiate with your credit card issuer is after the arrears are paid off. A history of at least 12 to 24 regular payments in a row can increase your chances of negotiating a lower payment or payment plan with your credit card company. When you call the lender, be sure to ask for a manager or supervisor who will approve your request. A service representative may not be authorized to make changes to your account.
You can use a credit card to pay for anything from groceries to gas. But this convenience comes with a price—if you don’t pay off the balance in full each month, the credit card company will charge you interest on your debt.
The interest you pay is usually a percentage of the card balance, so the higher the balance (the more purchases you make), the more interest you’ll pay. And carrying balances on multiple cards can pay off your debt faster.
Ways To Get Out Of Credit Card Debt In Singapore
Many credit card issuers calculate your interest on your daily credit card balance. This means that the sooner you pay off your credit card balance – even in part – the less interest you’ll pay. The higher the interest rate, the more credit card debt snowballs, making it harder to pay it off.
Credit card debt can also negatively affect your credit score. A large portion of your credit score – 30% – is based on your credit utilization, which compares your credit card debt to your total limit. If you have multiple cards, it is the sum of their values.
For example, if you have $5,000 in credit cards and your credit card limit is $7,500, your credit utilization ratio is 67%. Having a credit card balance that is more than 30% of your available credit can cause your credit score to drop, because you may be close to maxing out your cards and not taking good care of your finances.
This depends on the credit card issuer (if you are using a balance transfer credit card) or personal loan lender (if you are taking out a debt consolidation loan). For account transfer cards, the limit may be the card’s credit limit, or your card may have a specific lower account transfer limit.
How To Get Out Of $30,000 Of Credit Card Debt
Each individual lender has their own requirements, but you may be able to combine up to $50,000 or $100,000. Keep in mind that many lenders require a minimum loan amount, such as $2,500, although some can go as low as several hundred dollars. Before applying for a loan, be sure to find out if the borrower can provide enough money.
You can prioritize any debt you want, but there are two debt management strategies that can help. One method is debt snowballing, where you pay off the loan with the smallest balance first while making the minimum payments on your other credit cards. Once your minimum loan is paid off, you can continue paying the balance. This method can motivate you when you break the balance.
Another option is debt relief, where you pay off the credit card at a higher interest rate. Once paid off, you pay the card at the next highest interest rate. This method will help you save more interest over time.
Debt settlement companies may ask that you negotiate with the lender to pay less than what you owe. But working with these companies can be risky, as they may charge you higher fees or tell you that you have to pay off your loan, which could put you in even more debt.
Major Credit Card Mistakes
Debt settlement companies may not be able to settle your debt, and if you stop paying your debt, it can work with them to negatively impact your credit. Instead of using a debt settlement company, consider contacting a credit counselor from a nonprofit organization like the National Foundation for Credit Counseling.
If you’re ready to tackle your credit card debt, visit Credible to compare debt consolidation loan rates. Is credit card overuse at grocery stores wiping out your income and putting you in debt? Well, you are not alone. Read Thani’s story which shares a similar story –
Tani is an educated, working woman whose favorite pastime is shopping. Being a fashionista, Tani bought what was popular in the market. Sujata’s mother is worried about Thani’s chronic spending habits. Seeing all this, one day she finally confronted her and said, “Tani, learn to spend your money wisely; you don’t need to wear new clothes at the market.” Tani did not take her mother’s words as advice.
He is left with regrets and a credit card bill that has accumulated over time, which is still not enough. If you can relate to Tani or are close to her situation, this article is definitely for you.
The Best Ways To Get Out Of Credit Card Debt [detailed Guide]
It can be called transfer loan. It’s money you owe to creditors for all purchases you make with a credit card. Credit card debt in India is unreliable, short-term.
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