Not all of us were born Thrifty Divas. Some of you may visit our site regularly, but you’ve just recently started to cut corners and save money with all of our tips we post lately. One of the questions I receive a lot is how to pay off credit cards. Many years ago as a college freshman, I fell into the trap of credit cards. I definitely wasn’t prepared for them nor was I responsible enough to pay them every month.
As a freshmen with a new found freedom and a piece of plastic that could buy me anything immediately, I quickly got into thousands of dollars worth of debt. It was horribly depressing and I spent my senior year of college just trying to clean up my mistakes. I now have a very healthy fear of credit cards and try my hardest not to let other college freshmen fall into the trap that I did.
Some of you may not have gotten into credit card debt the way I did, but you may find yourself in the same situation spending most of your hard earned money on interest, lay fees and penalties. Here are some tips I learned along the way to getting out of credit card debt.
1. Don’t ever get one. Okay, someone is going to say it, so I will state the obvious. If you don’t want credit card debt, try your hardest not to get one. It may be easier said than done for some, but it is the easiest way to stay out of debt.
2. List your credit card debt and make a plan for paying them off. I think the easiest way to do this is to make a list from the most debt to the least. The reasoning behind this is because bigger balances cost more monthly because of interest. If all of your cards carry similar balances, list them by interest rate. Try to pay off the higher interest rates first.
3. Pay more than the minimum. Most credit cards now have a place on the statement where they tell you how much you’ll pay if you pay the minimum and how long it will take you to pay it off. Even if you pick only one card to pay more than the minimum on, you will start paying them off.
4. Ask for a lower interest rate. We covered this a couple of weeks back, but credit card companies want your business. Some will lower your interest rate just because you ask. If they don’t want to, ask that your card be deactivated and that usually changes their minds. Not that you should use scare tactics, be prepared to fully follow through.
5. Avoid debt consolidation. According to financial guru Suze Orman, “Be very careful where you turn to for help with credit card debt. Debt consolidators are often a very bad deal. The National Foundation for Credit Counseling is a smarter choice.”
6. Use your tax refund. I always say you shouldn’t count on your refund for anything. Then when/if you get it, it’s just like extra money. And with extra money, you should pay off debt. It’s that simple, when you’ve prioritized your list of credit cards, so through and pay off what you can. I promise, you will feel as amazing as you would have if you’d have spent the refund on a new flat screen television.
Have you gotten out of credit card debt? What are some tips that helped you?
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