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Tools and Tips to Pay Off Your Credit Card Debt

IndianMoney.com Research Team | Posted On Tuesday, December 17,2019, 05:57 PM

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Tools and Tips to Pay Off Your Credit Card Debt

 

 

Are you in a situation where you find your credit card outstanding dues are overwhelming? While credit cards are one of the best tools that can significantly improve your credit score, you may end up hurting your creditworthiness if you carry a high amount of debt on your credit card. If you have a high credit card debt and you are looking for ways to pay off your high-interest debt, then you must read the below-given tips: 

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Tools and Tips to Pay Off Your Credit Card Debt

Pay More Than the Minimum Amount:

While making payments using a credit card make sure not to go overboard with your credit limit. You credit cards spend must align with your income or your repayment capacity.

Paying just the minimum balance is not the right way to manage your credit card bills. Make sure to check your bills and pay an amount higher than your minimum balance. One of the main benefits of paying more than the outstanding amount is that you will be able to save a considerable amount of finance charges.

Make sure to incorporate this habit while making your credit card payments. This simple solution will help you lower your interest burden and thus reduce your debt.

See Also: Check Credit Score Online

Re-Prioritize Your Budget:

When your focus is to manage your credit card bills then you must consider re-prioritizing your budget. It is important to categorize your monthly expenditure in the right way. Credit card is a powerful tool that can help you improve your credit score and create a history of repayments. Thus even if your monthly expenses are higher, consider maintaining your credit utilization ratio below 30% while making payments.

You can pay half of your bills through credit card and the remaining amount through your debit card as well. Segregating your budget will allow you to manage your finances well. This way you can also save some money which you would have otherwise spent on paying credit card debt.

Pay Off Debts With The Highest Interest Rate:

The most important thing you must focus on while dealing with debt is to keep it manageable. Take some time off work and re-evaluate the amount of credit card debt you have. If you are using multiple credit cards then find out which one charges the highest interest.

This way you will be able to understand which credit card debt you should pay off first. According to experts, paying off high-interest debt is a better option when you have more than one credit card debt to pay. When you have cleared your high-interest debt, you can proceed to pay the next one.

See Also: Credit Score India

Consolidate Credit Card Debt:

Personal loans can be a good alternative if you have a large credit card debt. This is one of the most effective ways to settle your credit card debt. If your debt is spread across multiple credit cards, then you can apply for a personal loan that can be repaid easily within 3-5 years. If you have a good credit score then you may consolidate your entire debt under one loan.

If you believe you can repay your debt within this period, then personal remains the best way to save your interest costs. You can pay off a fixed amount of money at a fixed interest rate by consolidating your debt through a personal loan.

Consider a Balance Transfer Credit Card:

One of the smartest ways to handle credit card debt is by transferring your high-interest credit card balance to another. You can transfer your debt if your existing bank is charging you high interest on your outstanding balance.

Experts believe this is one of the most effective ways to pay off your outstanding balance at no interest cost. However, you must proceed with caution when it comes to balance transfer. It is important to evaluate your financial situation and have the necessary details you need in this regard.

Conduct an online search and compare the interest rate and the introductory offers provided by credit card issuers. Make sure to apply for a low balance transfer credit card if you wish to transfer your balance. A balance transfer can help you improve your credit score, lower your credit utilization ratio and increase your overall credit.

See Also: What Are Bad Debts?

Re-evaluate Current Expenses:

Assessing your financial situation is very important when it comes to managing credit card debt. You must consider re-evaluating your expenses and making adjustments accordingly. While re-evaluating your expenses consider the following points:

  • List your monthly expenses
  • List the amount of debt you have
  • Calculate your debt to income ratio
  • Check the amount of emergency fund you have
  • Consider reducing your unnecessary expenses to save an extra amount so that you can pay off your debt easily

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