There are six ways to escape from the pit of debt

Never carry a balance on your credit cards, they said. If you can’t pay it every month, they say, cut it off and throw it away.

Too late. You went up a balance. There are thousands of dollars, maybe tens of thousands, in cards that have interest rates close to your annual rate.

The customer can get out of the gray on the credit card. A person who borrows $10,000 on a card with 20-percent interest and pays $200 a month will retire the debt in eight years and replace it, with a total cost of $21,000, according to a popular popular. credit card interest rates. And that means the customer will no longer use the card.

Here are six ways to get out of debt faster. All of them can save time and money. Choose the one that suits you best.

Get a no interest credit card

It sounds too good to be true: A bank will send you a credit card with no interest for 12 or 18 or 21 months, with no real strings attached. sticky

A low APR credit card is probably the single best way to reduce credit card debt, in terms of pure savings. The standard card allows the customer to transfer thousands of dollars of credit from other accounts for a one-time fee equal to a few percent of the balance being transferred.

After that, in most cases, your entire monthly payment will reduce your debt. Not a penny is lost in interest.

“The no-interest balance-transfer credit card is a very powerful tool,” said Matt Schulz, chief financial analyst at Lending Tree, the online loan marketplace. “Being able to go a year, sometimes up to 21 months, without incurring interest on a balance is a very big thing.”

The bottom line: After the promotion, the lender will start paying interest on the remaining balance. To avoid this, make a budget. If you can pay $300 a month on a no-interest card, and have 18 months of no interest, that’s about $5,000 more on the card. In 18 months, you will be debt free.

Also remember, “this will be a credit card that will be in your wallet and you can use it after this promotional period,” said Bruce McClary, a senior vice president at National Foundation. for Credit Counselors.

In other words, resist the temptation to pile up more debt on the card after the interest-free clock expires.

Pay the smallest balance first

A customer who holds debts of different rates and amounts can be scored quickly and painlessly by simply deleting one of them from the list. But why not start with a small debt?

Financial planners call this the snowball technique. List all your debts, choose the smallest one and pay it off as soon as possible. Soon, a list of seven or eight debts can be reduced to five or six, showing the speed of the snow.

“That’s the power to get people excited,” McClary said.

Pay off the debt at a high interest rate

A popular snowball is the avalanche: Rank your debts from highest interest to lowest. Then, make aggressive payments on the one with the highest value.

For a customer with a lot of debt, focusing on the one with the highest value makes good financial sense.

“Over time, you’ll pay less interest, because you’re targeting higher interest rates first,” says Sara Rathner, credit expert at NerdWallet, the personal finance company. himself.

The downside: If that high-interest debt is a large amount, paying it down may take years. An avalanche may look like an avalanche.

snowball or avalanche? “It’s really about finding what motivates you,” Schulz said. “Some people are motivated by small wins, so it’s better for them to pay off that small balance first and swipe the card and feel motivated. For others, it’s just a number.”

Call a credit counselor

The methods listed above are not for everyone. Borrowers with low credit scores may not qualify for an interest-free credit card. Dividing and overcoming one’s debts is beneficial for those who have cash to pay down.

Some borrowers are in over their heads. They may not have enough money to even make a down payment, causing it to be expensive. Fees and interest can push the credit card balance past the customer’s credit limit, triggering more bills.

For them, one option is nonprofit National Foundation for Credit Counseling. A credit counselor “can sit down and evaluate your financial situation and offer a plan of action,” McClary said.

Unsecured credit counselors can save borrowers from delinquent notices and debt collections. They work with lenders to stop or waive late fees, “over-limit” fees and other fees and reduce interest, reducing the amount of debt the consumer owes. The client makes one payment per month to the advisor, who splits the money and sends it to the creditors.

A counseling service can get a borrower out of debt “in four years or less, in most cases,” McClary said.

Call the bank

A consumer with one or two credit cards who wants to get started on retirement debt should consider making a simple phone call to the bank that issued the cards.

First, find your score. The higher the score, the stronger your sales position. Then call the credit company and start a polite negotiation. The lender may agree to lower your interest rate. The company can also waive heavy fees to pay off your debt, or offer a temporary grace period from monthly payments.

“It will be more difficult to achieve success if you have multiple credit cards,” warns McClary. And only the card holder can benefit from getting temporary relief, while a professional counselor can negotiate on a permanent basis.

Hide the card

Customers who do not pay their credit card balances each month should not use credit cards. But it’s not so easy to go cold turkey, especially if the card is sitting right in your purse or wallet.

One way to reduce credit-card temptation is to remove the card from the game, credit experts say. Place in ice. Locked in a drawer. Cut in half and discard. It’s harder to swipe a card you don’t have.

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