Credit card debt is an issue that many Canadians struggle with. It’s easy to spend money, but not always so easy to pay down the debt. This is especially true if you have credit cards with high interest rates and you pay only the minimum payment each month. It can seem like a never-ending cycle. However, there are some ways in which you can end this vicious cycle and successfully pay down your credit card bill.
Pay off the Smallest Debt First
Although many experts say to pay off the debt with the highest interest rate first, paying off one debt at a time, or snowballing, is a good way to modify your behaviour. By paying off one bill, you’ll be motivated to pay off the next one, and then the next one after that, until all of them are paid off. This is a good tip for almost every consumer, but if you have larger debts that can lead to repossessions or foreclosures, then obviously you should pay those off first.
Pay More Often
You don’t necessarily have to pay your credit card bill once a month. You can pay bi-weekly or even weekly, if you prefer. And you don’t have to pay the entire payment at once. You can make a half payment every two weeks, meaning that at the end of the year, you have made 24 payments instead of 12. This is especially a good idea for those who get paid every two weeks.
This tip is controversial because many consumers believe that savings should be used for emergencies only. However, if you keep money in a savings account at a 2 percent interest rate and your credit card interest rate is more than that – most are 10 percent or higher – then you are making a profit. It’s not recommended that you use your entire savings account, but if you can spare $1,000 or more, it’ll be beneficial in the long run.
Avoid Excessive Credit Card Debt
Credit cards are so easy to obtain and use that it can be easy to get stuck with tens of thousands of dollars of debt. Don’t continue to drown in debt. Let us help you find resources to pay down your debt to make it more manageable. Call us today at 1-888-329-5198 and schedule a consultation so we can review options that fit your needs.