Clearing Credit Card Debt : How to Clear your Credit Cards Quickly

A credit card helps you to borrow money repeatedly with the provision to pay it back within a specific time. However, it is one type of revolving debt. But, credit card accounts and the installment loan accounts are not the same, as you can use this account indefinitely. So, clearing credit card debt is not as easy as you might assume it to be. You need to keep in mind that these debts are unsecured and even your properties can be seized if you are not able to make timely payments. 

Hence, make sure to repay your credit card debts as it can damage your credit score and financial history. Here, we have discussed some tips that will help to clear debt fast.  

Clearing Debt Tips

Some of the effective ways that will help you to clear your credit card debt are given below. 

Solution 1: Gather Your Personal Information

First, you have to know your own position when it comes to clearing debt for your credit cards. For that, you need to evaluate your financial situation. 

  • Check whether you have the most recent bills of your credit cards. You should have the loan statement that includes the student loan. 
  • You need to have your credit reports, which helps to check the accuracy. This report will help you to identify all your recorded debts. 
  • Check whether you know your credit score or not. The credit score will help you to know whether you have to pay a lower interest or not. This score will also help to know whether you are eligible for a debt consolidation loan or not. 

Solution 2: Make a List of Debts and Income 

After gathering all your information, you need to make a list of all your debts. Now, check whether you have details like the creditor’s name, interest rate, minimum monthly payment, and the balance or not.

Next, calculate how much you have to pay to clear your credit card debt balance within three years. The time to repay it might vary according to the type of your debt. 

Also, there are a few things that we have not listed. But assure that you have included those details such as medical bills, a family loan, recurring bills, and many others. You should know how much monthly take-home pay costs. 

Solution 3: Make a Strategy for the Payment

Here, we have discussed some methods that will help clearing debt fast for you. 

Try to pay More than Minimum 

Generally, you have to pay 2% to 3% of the balance because of the credit card issues. But before that, check whether you are making monthly payments or not. If you pay more than the minimum amount, then you will be able to resolve the credit card issues early. Thus, you will be able to save extra money. 

Debt Snowball

Your sense of accomplishment will act as a motivation for paying down your debt under the snowball method. This method will help you to eliminate the debt and you will be able to make bigger payments gradually. 

Debt Avalanche

You can say this method is similar to the snowball approach. In this method, you can consider paying the higher interest first. Compared to snowballing, the Debt Avalanche method is faster and cheaper. 

Automate 

This method is the easiest way to clear your debt. Besides, automating payments helps you to avoid paying additional costs such as late fees. 

Solution 4: Work with your Creditors

You can go to your creditors in order to discuss your payment terms. In this scheme, you can pay a smaller minimum payment or choose not to pay it for a certain time. However, if you would like to pay the minimum amount, then you need to have a good track record for payments. 

Only then a creditor might agree with your proposal. Hence, after going to your creditor, you need to explain your situation and also the steps that you like to take. So, because of a small change in efforts, you will be capable of handling your debt. 

Solution 5: Make Sure to Take Help

It might be possible that you are paying more than the amount that you owe. This can be the reason why you are struggling to get your debt under control. At that time, you have to take some of the serious steps that we discussed below. 

Debt Management Plan 

If you want to create a debt management plan, you can take help from a non-profit credit counseling agency. Here, you will notice that the counselors are discussing new rules with your creditors. 

Also, they will try to put together all your credit card debt in one place. Due to this settlement, you might have to pay a fixed rate each month to the counseling agency.  

Debt Settlement 

You will find that a creditor will accept less than the amount that you borrow under specific debt settlement. Although you might find this option not the best one for you, it can help to clear your debts. 

Now, if you want a negotiation with your creditors on your behalf, then you need to hire a debt settlement company for that. 

Solution 6: Consider Debt Consolidation

Sometimes, it might be possible that your credit is good but, the debt payments are not overwhelming. At that time, you can try to consolidate them into one account and make just one payment each month. 

Credit Card with 0% Balance Transfer 

If you want to be free from your credit card debt, then applying for another credit card might seem illogical. But you should know that a 0% balance transfer credit card will help you to save the money in the long run. After getting this type of credit card, make sure to transfer your remaining amount of debt to that one account. Here, you won’t have to pay the interest, just make one simple payment every month. 

Personal loans

With the help of a fixed-rate debt consolidation loan, you will be able to pay off your debt effortlessly. Due to your personal loan, you will have to pay interest where the rate is lower than the credit cards. 

Moreover, if you want to calculate the savings, you can use a debt consolidation calculator. 

Solution 7: Make a Bare-Bones Budget 

You always want to pay off the debt faster and to do so, you need to cut your expenses. Hence, you can prepare bare-bones budgets in order to reduce your expenses. However, this budget is not the same for everyone. 

If you want to pay considerably more towards your debts, then you need to live a life on a strict budget. But you need to remember that the bare-bone budget is not a permanent solution. So, when you are out of your debt, you can switch to your monthly budget. 

Solution 8: Get a part-time Job

You can find a part-time job that will help you in clearing up debt. During the time of holidays, local retailers search for flexible workers who can operate their stores. So, you can pick these jobs to get some extra cash. You can use this cash to clear your debts. 

Solution 9: Ask for Lower Interest Rates 

Sometimes, your credit card interest rate might be very high and it is impossible for you to pay back that money. In such cases, you can go to your credit card issuer in order to discuss this matter. If you want to get a lower interest rate, then try to pay the bills on time. 

Using this strategy, there are some other types of bills that you can eliminate as well other than credit card interest. So, if you want to clear your debts, then you have to pay less for the fixed expenses. 

Solution 10: Consider Balance Transfer

It can be possible that the credit card company won’t try to cut down the interest rates straightaway. At that time, you can consider the balance transfer process. So, find some of the balance transfer offers that will help you to secure a 0% intro annual percentage rate for up to 18 months. 

But, keep in mind that you will have to pay a balance transfer fee to get this privilege. 

Solution 11: Drop Your Expensive Habits

You have to drop your expensive habits when you are in debt and reduce it every month consistently. Besides, you need to look for ways to save your money as well. So, you might have some expensive habits like smoking, or drinking, which you should quit immediately. 

If you want to get out of credit card debt, you should avoid restaurant lunches during work hours. You even have to stop eating fast foods, beverages, etc. 

Somehow, if you are unable to eliminate these behaviors, you need to replace them with something less expensive. 

Solution 12: Make an Emergency Fund

While paying off debt, make sure to save some money for urgent purposes. There are times when you might come across some circumstances like a medical bill, car repair, etc. 

In some scenarios, you might even lose your job all of a sudden. So, at that time the money you saved will help to survive. Hence, you need to make an emergency fund for such unavoidable purposes and also, to clear debts.