Credit card debt affects far too many people in the United States. Many Americans don’t even realize how badly they are in debt, and they think they are helping their cause by paying the minimum monthly amount. Yet according to a 2014 NerdWallet analysis, the average household in the U.S. has more than $15,000 in credit card debt. Despite that figure, around 90% of people believe that they had less or the same amount of debt than the average. The average balance for an individual credit card is exactly $1,157. Interest can make your already substantial debt feel even more unobtainable. Let’s say you have a credit card debt of $10,000. If you make the minimum payment of $200 a month at a 20% interest rate, it would take you nine years and eight months to pay off! That $10,000 worth of credit card debt — because of the $11,680 of interest — turned into $21,680. Don’t let that happen to you. If you’re struggling with credit card payments, here are three essential tips that may help you get out of debt:
Don’t Get in the Habit of Paying the Minimum
Only paying the minimum required amount on your debt is exactly what the banks want you to do. Usually the minimum payment is only 2% or 3% of the outstanding balance, so only making that small of a payment prolongs the debt process. The more time it takes to pay off the debt, the more interest the credit card company can make.
Pay Double of Your Minimum
The second tip is to pay as much as you can each month, ideally twice the minimum. It will be tough sometimes but worth it in the long run if you can cut down that debt faster. Doubling your minimum payment is a great way to speed up the process. If you can, pay even more than that!
Transfer High Interest Debt to Low Interest Accounts
By taking a look at your credit cards, find which ones have the lowest interest rates. If you haven’t reached the maximum limit on that card, then transferring a higher-interest bill to that card can help.
Debt is a serious issue that has the power to ruin lives, but it doesn’t have to be that way. It’s extremely important to handle all your finances responsibly and do whatever you can to get out of debt.