3 Ways to Manage Credit Card Debt

According to 2015 statistics reported by the Federal Reserve, the total amount of American credit card debt was calculated to be well over $900 billion. In a separate report on national credit card debt released in the same year, Nerd Wallet reported that the credit card debt of an American household is $15,675.

Though the statistics can be troubling, credit card debt doesn’t need to be debilitating. The following are some of the most effective ways to manage the debt and gradually become more capable of eliminating it.

Consider consolidation

One of the most effective first steps that can be made towards managing debt is to lower the interest. Under certain conditions, you might be able to take several different high-interest debts and consolidate them into single debts with a more forgiving interest rate.

Any credit cards with high interest can be marginally lightened with low balance transfer rates. Though the balance transfer rate may be as much as 5%, consider the amount of money that can be saved from the lower rate of interest in the long term. In any circumstance, successfully managing debt with a balance transfer will be most feasible if you can realistically commit to paying it off within the time frame (typically between 1-2 years) provided along with the lower interest rate.

Establish a hierarchy of debt payment

Your debt management will be all the more effective if you have an organized priority tree that indicates which debts should be paid off first. Identify the debts that are the most urgent to immediately deal with before any others, such as your personal loans or monthly credit card payments.

High-interest loans can be followed by dealing things that have a lower interest rate, such as student loans. No matter what the unique sources of debt may be, it is always wise to work towards neutralizing the high-interest targets before any others.

Consider making more than one minimum payment

Monthly minimum payments may not be enough to fully consolidate your debts within a reasonable window of time. If you cannot afford to address high-interest card debts with much more than one minimum payment at a time, then you could potentially expedite the process by making bi-monthly payments instead of only once a month.

The above techniques may not eliminate debt immediately, but they can provide significant relief and leverage. Whatever your chosen debt management technique may be, make sure to commit to a policy of refraining from creating any additional debt in the process.

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