If you have high credit card balances in 2018, you should prioritize the payment and do it in the quickest time possible. The reason is because credit card debt is now more expensive than ever, and if that’s not reason enough, here are a few more statistics to fuel your desire to get out of debt.

1. Total revolving debt in the United States as of February 2018, which is primarily made up of credit card debt, reached $ 1.030 trillion, according to the latest Federal Reserve statistics. This is a historic record for our country.

2. Interest rates have already increased twice in 2018, and the CME FedWatch Tool suggests that there will be another rate hike later this month.

You’re about to learn the six best ways to pay off high credit card debt, but before we dive in, let’s first look at the most expensive option you want to avoid.

The most expensive credit card relief option

The most expensive credit card relief option is when you only pay minimum monthly payments. Never only minimum monthly payments on credit cards because you will end up paying the maximum amount in interest. For example, if you have a Chase credit card balance of $ 15,000 and your interest rate is 29%, when you pay only minimum payments, you will end up paying a total of $ 45,408 in interest only and it would take more than ten years. . to pay the balance.

1. Debt Snowball Method:

The debt snowball method of paying off your credit card balances proved to be the most effective credit card debt relief option in 2018, according to new research published by Harvard Business Review.

With the debt snowball method, you pay off the credit card with the lowest balance first. Instantly after your opening credit card balance is paid in full, your monthly available cash flow will increase. Then you will use the additional funds to pay off the next smaller account. Once the second smallest account is paid in full, your available cash flow will increase even more and continue to grow, just like when you roll a snowball. Then use all that extra money to pay off the third smallest bill.

This method works using psychological principles. When a person achieves a goal, like paying off the first credit card debt, the brain releases dopamine and it feels good. And you want more of that good feeling, so you’re motivated to continue paying off each debt one by one. Before you know it, you will start to see the light at the end of the tunnel and your momentum will be at its peak, and at that point, nothing will stop you!

2. Debt avalanche method

The debt avalanche method focuses on attacking the account that is costing you the most money, which is the account with the highest interest rate. If you like math and numbers, you will most likely go this route as it makes the most sense from a technical point of view.

Technically speaking, this route will save you more money than the debt snowball method, if you can successfully follow the plan.

There is much controversy surrounding the argument of which route is more effective, the debt snowball or the avalanche method. Understand both options, and then based on your personality type, you can determine which route is best for your situation.

Some people may choose to use a combination of these two options. You can start with the debt snowball method, quickly eliminating your smaller debts that have a balance of $ 1,000 or less, and then switch to the debt avalanche method to pay off the rest of your balances, but from the debt. most profitable way. .

3. Balance transfer cards:

You can lower your credit card interest rates by using a balance transfer card that is interest-free for 12 to 18 months. If you can pay your balance in full on the balance transfer card during the introductory period when the interest rate is zero, you will end up eliminating 100% of your interest and only have to pay the initial transfer card fee of balance.

Make sure to keep your credit cards open after paying them off because closing a credit card lowers your credit scores.

There are upfront fees that come with these cards, which vary between 3% and 5% of the balance.

Look for a balance transfer card that comes with:

Low initial fees

An 18-month introductory rate

An interest rate of zero percent

4. Home equity line of credit:

A home equity line of credit can be used to pay off high-interest credit card debt, saving you thousands of dollars in interest. Home equity lines of credit have lower interest rates than any other type of bank loan. BankRate.com estimates that the average interest rate on a home equity line of credit is only 5%.

The downside is that you are switching your unsecured debt to secured debt, and this can be dangerous because if you miss payments for any reason, you could lose your property due to credit card debt.

5. Get your creditor to lower your interest rate

Don’t overlook the following method, because of how simple it is. Sometimes the simple things in life get overlooked.

Call your creditor and ask for a supervisor. Remind them how many years your customer has been and how perfect their payment history has been over the years. Now tell them that you are upset that they are charging you such a high interest rate and illustrate an offer another bank is making. If your credit score had increased from the first time you applied for that credit card, mention that as well.

Do some research and find a credit card company that offers a lower rate, and then you can use that as leverage.

Example: “Capital One offers me a credit card with an interest rate of 8% and 1% more than what you offer in cash back. Could you lower my interest rate so that I can keep your bank? that my credit score had increased from the first time I applied for a card at his bank two years ago. “

6. Debt relief programs:

A consumer credit counseling program can lower your interest rates and get you out of debt in less than five years, without affecting your credit score. All of your credit card debt will be combined into one consolidated monthly payment and the consumer credit counseling company will distribute the funds each month to your creditors, but at the reduced interest rate. This program has the least effect on credit scores of any other debt relief program.

A debt settlement program should only be used if you are behind on credit card payments and cannot afford more than the minimum monthly payments. The reason is because this type of program can drastically lower your credit score and lead to negative notations on your credit report. However, if your credit score is already in the well, then at this point you just need to focus on getting out of debt in the quickest time possible and avoiding bankruptcy. Once you are debt free, you can rebuild your credit score.

If you feel like filing for bankruptcy, debt settlement can be a viable alternative that saves you from debt in about three years and provides you with an affordable monthly payment on all of your unsecured debt.

Need more options to get rid of high credit card balances? Check out this article below.

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