When you’re saddled with a large amount of credit card debt, it quickly becomes clear that just paying the minimum amount due each month isn’t going to get you very far in cutting into that balance. And it can be disheartening to see the amount you owe creep up as interest continues to accrue each month, despite your regular payments.
What to Do with Excessive Credit Card Debt
There are, however, a couple of different ways you can tackle your credit card debt beyond your traditional monthly payments. With some strategic planning and analysis, you could find a way to save money on interest and pay off your credit card even faster than you could ever have imagined. Ready to learn how?
Take Out a Personal Loan
With interest rates at a near historic low, it’s very possible that you could qualify for a personal loan that has a lower interest rate than your credit card. Consider paying off all of your high interest cards with a loan and then make one regular payment each month. You can typically pick a loan term that is long enough to make your monthly payments work for you; in fact, you might be able to find one up to seven years. And with online lenders increasing, you could very well qualify regardless of your credit history.
There are, however, a few things to take into account with a personal loan:
- Make sure you’re saving money on interest for the full life of the loan.
- Compare rates to make sure you get the lowest rate available.
Transfer Your Balance
Another option is to transfer all of your credit card balances to a low interest credit card. Many cards offer a temporary introductory rate if you do this, which can sometimes be as low as 0% for the first year. As with all things, there is a catch. Once your introductory period is over, your interest rate could very well be higher than your current cards. If it is, you need to prioritize paying off those balances within the allotted time frame so you don’t run the risk of paying even more interest than you did before.
Also check for any fees associated with transferring your balances. The credit card company will give you an annual percentage rate, or APR, which factors in both the interest rate and other costs associated with the card. Use this number as part of your evaluation to find the best deal available.