Given stagnant wages and a high cost of living, it’s no surprise than over half of Canadian adults (55%) currently carry credit card debt. Of those who carry credit card debt, 51% say it will take at least six months to pay it off. Excessive credit card debt creates high stress levels, especially combined with a high interest rate. This article offers five smart strategies to pay down your credit card debt more quickly and move toward a brighter financial future.
Tip #1: Pay More Than the Minimum
Paying more than the minimum amount may help you pay off your debt more quickly. Only paying the minimum payments will prevent you from making progress because you will be paying the interest and not the principal amount that you owe. Paying down the principal amount is what will ultimately make the difference. Following a budget is key: make sure to allocate a portion of your income toward making greater-than-minimum payments on your credit card(s).
Tip #2: Use the Avalanche Method
The avalanche method has you pay your highest-interest debt first, followed by lower-interest debt. In this manner, you can rid yourself of the debt with the highest interest payments faster, thereby ridding yourself of the heaviest and most expensive debt. While you focus on paying down the main debt, maintain the minimum payments on your other debts to avoid falling behind.
Tip #3: Use the Snowball Method
The snowball method has you pay off your smallest debt first. This may help motivate you as you will see progress more quickly. By sticking to the snowball method consistently, you may see results more quickly and get a little motivational boost every time another small debt is paid off.
Tip #4: Reduce Frivolous Expenses
Review your budget carefully. Do you have any unnecessary expenses? Perhaps you dine out frequently or have unused subscriptions. Reduce or eliminate such expenses so that you can direct your income toward debt repayment. By redirecting more of your income toward debt repayment, you could make progress more quickly.
Tip #5: Automate Your Payments
Automatic payments can help you stay on track without having to remember every payment due date. Therefore, take advantage of automating your payments so you don’t have to miss payment due dates and can focus on other priorities. By not missing any payment due dates, you may make progress on repaying your debt more steadily and reach your goals faster.
Conclusion
Credit card debt causes high stress levels and a strain on finances. The above tips could help you pay off your credit card debt more quickly and deal with the stress.
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