Are you looking for a way to pay off credit card debts fast? You are tired of your credit card debt and you may not be able to deal with it anymore. That’s why we have prepared an article that will help you in this regard.
How To Pay Off Credit Card Debt Fast?
It is true that people have a lot of debt to pay in today’s world. Most of the people want to get rid of that quickly. It holds people back from contributing to their retirement accounts and it affects their future. Credit card debts hold people back from making critical life decisions about their long-term future. They are not able to save money because of debts. There are a lot of companies that offer some loan consolidation plans.
What these loan consolidation plans can do is if you are paying 4-5 different bills monthly, it consolidates them into one loan. If you have a lot of bills to pay every month, it can be a good plan for you to pay off credit card debts fast. However, if you are looking for a long-term plan to pay off credit card debts fast, you can look at these two methods.
Debt Snowball Method
This method is basically listing all of your debts from smallest to largest by dollar amount regardless of interest rate. For instance, let us say you have a credit card payment for $1,400, you have a student loan $1,750, and an auto loan that you owe $2,000 on. According to the debt snowball method, you would order this from smallest to largest, but you do not have to look at the interest rates while ordering. If you do that, the credit card would be first, student loan would be second and auto loan would be third on the list. You are going to pay off the first out one of a time while making minimum payments on the other two.
As I already mention, you do not have to look at the interest rates. One the credit card debt is finished; you will take your money that you were paying on the credit card and move it to a student loan. It is a simple method that has proven to work. It allows people to sort of eradicate different types of debt faster than what you could do with the other debt avalanche. You can see a lot of progress in a short time. If you have struggled with paying off those bills in the past the debt snowball method would be a good route for you. You can research this method and exact strategies on YouTube.
This debt paying method is different than Debt Snowball Method. For example, let us say you has same debts to pay such as student loan, credit card and auto loan. But each of them has different interest rates, percentages. Student loan’s interest rate is %6, auto loan’s interest rate is %5 and your credit card’s rate is %23. Debt Avalanche method says that you have to pay off your highest interest rate debt first.
This is mathematically the most effective way to pay off credit card debt fast and get rid of them easily. Credit card will be the first, the student loan will be second and an auto loan will be third in order to pay off. You need to make the minimum payment every month for second and third debt while you try to crush the first one.
Then you will move on the second highest interest. You can find all these interest rates by calling whoever is giving you that loan or looking on their website or your account to see how much interest rate you are paying every month. Therefore, the first thing you have to do is find out what your interest rate is for all of your debts and write it down or list it to look at when you need. Pay off the highest interest rates debt first then when it is totally gone, you have other types of debt however you will pay all the minimum payments for that other types of debt. It is Debt Avalanche strategy.