Credit Card Debt
Regardless of how high your credit limit or how good your spending habits, it’s easy to get behind on payments. Once you’re behind, credit card debt can destroy your credit score and quickly drain your bank account. However, making a few changes to your spending habits can help you pay off credit card debt and rebuild your credit score.
What Is Credit Card Debt?
Credit card debt is a type of revolving debt that allows you to continue to borrow and repay the money you use. Credit card debt may become an issue if you are not paying the entire balance of your credit card each month. Because credit cards typically have higher interest rates than loans or lines of credit, if you have a remaining balance on your card at the end of the month, you will be charged interest on top of the amount you already owe.
Depending on the balance you owe on your credit card, your interest charges may be substantial and make it more difficult for you to pay off your credit card and get out of debt.
You could be debt-free in 24 to 36 months.
How Do You Accumulate Credit Card Debt?
For every month that you’re unable to pay back the full amount owed, you’ll be charged an interest rate in the form of an annual percentage rate (APR). The longer it takes you to pay off the full amount, the more you have to pay.
For example, if you have a credit card with a 15% APR and $1,000 of credit card debt and are paying the minimum balance of $25 per month, it will take you more than four years to pay off your credit card debt. Additionally, you’ll have accrued nearly $400 in interest rates. Total, you’d be paying back $1,400 and that’s assuming you don’t use additional credit cards and accumulate further debt.
How to Pay Off Credit Card Debt
Some options available to pay off credit card debt include:
- Consolidate credit card debt. Consolidating all of your credit card payments into a single payment can help you simplify and reduce your monthly payments.
- Use the debt snowball or avalanche method. Pay off either the smallest or largest debt you owe, while paying the minimum amount owed for your other cards, and then move to the next debt.
- Enroll in a debt management plan. Many non-profit counseling agencies can help you set up a repayment plan and get you out of debt faster.
- Seek debt resolution. One of the most effective ways of reducing credit card debt is through debt relief or debt resolution. A debt resolution company will negotiate with your creditors to forgive a portion of your debt and create a payment plan to back your reduced debt.
Get Help From a Debt Resolution Company
If you’re looking to reduce the amount of credit card debt you owe or want additional information on our debt resolution program, contact the experts at CreditAnswers, and learn why debt resolution is a better option. Get started on the path to becoming debt-free by taking a free debt assessment now.