According to the accounting firm MNP, 44 per cent of average Canadian citizens are 200 dollars a month away from complete financial insolvency due to credit card debt. The credit card is a helpful invention in terms of payment, but the temptation to just “put it on a card” and deal with the fallout later is all too tempting.
The worst offenders are individuals who pay for minor purchases with a card. Ladies and gentlemen, there’s really no point in paying an interest percentage on impulse buys at the local drug store. Carry some change around – Twizzlers are not going to break the bank.
Unfortunately, we’re all guilty of it, leading incrementally to insurmountable debt. To help you get out of a pinch, here are the seven best strategies to pay off credit card debt without completely destroying your credit rating.
1. Break Off Debt in Chunks at a Time
Oftentimes, citizens will have multiple credit cards, and the interest and debt one accrues on each can apper too daunting to tackle. So don’t pay it at such. Break up payments for multiple cards into smaller chunks rather than try and pay one off all at once. This will trick your brain into feeling like you have less to tackle while still staying ahead of the curve on payments. It may not actually change the overall math involved, but it’ll feel more manageable.
No matter the ultimate strategy, making the bare minimum monthly payment on each card will ensure you don’t acquire fees and other penalties.
2. Start With the Highest Rate
All credit cards will vary in interest rates, so it can be helpful both mentally and financially to start with the card that has the highest rate. With debt, the ultimate goal is to lower the risk of any unrealistic fees, so focusing on the card with the highest rate first will help lower the likelihood of such fees. Once you’ve paid that off, move onto the next highest and so on.
3. Start With the Smallest Balance
These strategies to pay off credit card debt may not be the most financially sound, but paying off the card with the least amount of debt first will at least mentally prepare you for larger fees. This is especially helpful for feeling accomplished while still having to eventually deal with the worst of the problem. In the long run, you may be risking more fees, but at the very least you’re doing your part to get out from the red.
4. Get a Zero Per Cent APR Balance Card
This kind of card affords you zero per cent interest for a cetain period of time, and it’s best to start out with one – particularly if you intend to use the card for a lot of major purchases. It’s also useful to transfer debt from one card with penalties onto the new card with none. Be wary of these strategies to pay off credit card debt, though, as the grace period doesn’t last forever. Your credit profile will determine just how long your interest free period will last, so it’s best to start with a card like this while your credit profile scores well.
Your options include getting a trustworthy payday loan, a credit card consolodation loan, or a personal loan. These loans allow you to put your existing debt into a more flexible payment plan that is usually repayable over an extended period of time. If you believe you can pay it back in the time allotted and have accrued a considerable amount of debt, this could be your best option.
6. Put a Credit Card on Ice
You don’t always know when you’re going to be struck with debt you can’t realistically pay off without getting hit by brutal fees. Having a backup card, unused, is always a safe way to avoid getting struck too hard. So when I say “put a card on ice”, it may as well be literal ice, as the temptation to use it rather than shell out some cold, hard cash might be all too easy to sink into.
7. Cut Down On Expenses
It cannot be stressed enough that keeping around some actual cash is always the best option. Wisely cutting down on expenses is the easiest way to do so. Begin slowly; start tracking your spending over a two week period to see what you can live without. There are countless lists online with helpful tips to advise you easy, pain-free ways to survive with frugality. Merely cutting down on how much you spend on coffee can save you up to $1000 per year, just by opting for the cheaper option as opposed to something more fancy.
It’s often helpful, once you have a grasp on how much you spend, to create a monthly spending plan using a speadsheet and sticking to it. It may not be the most fun option, but it will ensure you accrue the least amount of debt possible while still having the cash to pay it off when it hits.