How To Pay Down Credit Card Debt

Credit card is one of the useful services provided by banks. But not infrequently the use of credit cards that used to have good intentions turns negative. Many people use the wrong credit card until they end up in very large debts. If you feel heavy, the question is "How to pay down credit card debt".

Credit card debt (Source: militarymoneymight.com)

Credit cards are very useful when you are when the money in the account is running low. Credit cards are also very useful to help buy necessities with the monthly installment method so that the monthly salary does not run out immediately for these items. But many people fall into a vicious cycle of debt.

Best Way To Pay Down Credit Card Debt

There are ways to pay off credit cards, as follows:

1. Stop using credit cards temporarily

First, be aware of the high interest and credit card penalties incurred if payments are delinquent. It's safe if the transaction is immediately paid off before maturity. But, once there are outstanding bills that are delayed from the deadline, get ready for additional costs.

Therefore, so that the debt does not swell, do not use a credit card at all until the bill is paid off. Indeed, using this method does not mean that the interest bill is gone. But at least, the total bill does not continue to grow so it is increasingly difficult to pay off.

2. Apply for a balance transfer

Usually, credit card debt is getting heavier because of the high-interest expense and other additional costs that come with it.

On the other hand, credit card issuers generally have attractive offers at the beginning of the ownership year, ranging from 0 percent interest to annual fee-free promos.

Then just replace your credit card with a new one so you can get the promo. Then, switch the billing balance from your old credit card to another credit card. That way, bill payments can be transferred to the new credit card issuing bank. This is called transfer balance.

With a free annual fee promo or light installment interest of up to 0 percent, bill payments are much lighter.

However, please note that to make a balance transfer, there is an administration fee that must be paid. In addition, there is a maximum limit for transferring the balance.

3. Looking for additional income

Looking for additional income may be the most realistic solution to pay off credit card debt. For example, by doing side jobs after work hours or running an online shop business that has flexible working hours.

4. Use the debt snowball method

Have you ever heard of how to pay off debt using a snowball strategy?

If not, try imagining a small snowball rolling. As it moves, the snowball will get bigger and bigger.

That's roughly how the debt snowball method works. Like a snowballing movement, debt repayment is carried out from the smallest to the largest debt.

For example, if you have more than one credit card debt, plus other loans, then prioritize paying bills with the smallest nominal debt. While on other credit card bills, just pay the bill with a minimum payment. Keep repeating this method until all debts are paid off.

Psychologically, this strategy can make the mind much calmer because it can reduce the list of debts owned faster.

5. Use the debt stacking method

The debt snowball strategy can run smoothly if the rows of credit card debt owned have interest that is not too different from each other. But if not, the debt snowball strategy can make you lose.

Because, if you focus on paying off debt with a small nominal without considering the amount of interest, it could be that high-interest debt will be paid longer so that the interest expense will increase.

In the debt stacking method, debt is not sorted by nominal, but by interest. Debt repayment is done by prioritizing debt from the highest interest to the lowest. That way, interest costs can be reduced more optimally.

6. Deploy assets and savings

Indeed, it must be hard to give up the savings or assets you have. But, much better not having savings than not being able to sleep well because of being hunted by debt collectors?

Moreover, if the interest on credit card debt that you have continues to soar and make bills swell. So, if you still have an emergency fund or valuable assets, let go first to pay off your credit card bills.

7. Propose restructuring

If all the ways to pay off the debt above have been done but the results have not been significant, the last solution is to restructure the debt.

Debt restructuring is an improvement effort made by banks to creditors who have difficulty paying off their debts. You can go directly to the nearest bank branch office, then apply for non-performing loan restructuring.

The majority of banks are reluctant to provide credit or loans to restructuring customers because they are considered at high risk for bad loans.

In the restructuring, the bank will provide interest or principal discounts to make it easier for customers to pay off their debts. This is a middle ground for banks, rather than bad loans or not being paid at all. On the other hand, debtors can also get payment relief.

Hopefully this information about "how to pay down credit card debt" is useful for you.

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