Credit cards are a great tool for helping you out in an emergency or even just for rewards points over time as you are using them. In fact, they have been able to save people in tight situations more than once. Unfortunately, it can also be really hard to keep track of and pay off the money owed on them. In fact, Bankrate released a survey that showed that only 52% of Americans have more savings than credit card debt, showing that this is a real problem in the US. Ideally, youâ€™d have a larger savings. Here are a few ways to get rid of those creditors and start focusing on your savings.
Make a plan and stick to it
The first thing youâ€™ll want to do is make a plan. Maybe you are going to stop using credit cards all together and cut them up, or maybe youâ€™ll limit what you can use on the cards until the amount of money you owe on them is reduced. Whatever it may be, it is really important that you start by making a plan. The bigger problem is that you actually stick to the plan. If you have poor spending habits, avoiding extra spending can be really hard, so youâ€™ll need to be very careful and find ways to remind yourself of your goals.
Balance transfers or personal loans
One of the ways that Americans have such a big problem with credit cards is that they will have 4 or 5 from a bunch of different companies. It is stressful to manage that many accounts, and remembering each payment date or interest rate is almost painful. The Huffington Post recommends trying a balance transfer or personal loan. The basic idea behind both of these options is to consolidate your debt into one place, so you can pay it back with one payment a month at one rate.
With a balance transfer, you are getting a new card and transferring your balance from the old card at a very small or even 0% interest rate. It is tricky because the new interest rate will only last a year until it jumps up a ton, and any missed payment will also lead to increased rates. Many times, you canâ€™t transfer multiple cards onto one new card either, so it doesnâ€™t work quite as well as debt consolidation.
A personal loan works by letting you pay off all that owed money at once and then having one payment to a different company instead of the credit card company. If interested in either of these options, it is a good idea to speak with an expert to help determine if it is the right move and that it will work in your situation.
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