Credit card debt can quickly spiral out of control when you are running a business. Rather than ignoring the issue, you need to make a plan to tackle paying off this debt. Here are four ways that you can pay off your credit card bill more quickly.
Debt Snowball Method
Many consumers swear by the debt snowball method. This strategy pays the card with the lowest balance first before moving to the next one on the list. You can then roll over what you were paying on the first card into the payment for the card with the next lowest debt. Users of the debt snowball method save a significant amount of money on interest charges while also feeling more motivated to cross one more debt off of the list of burdens. Additionally, you will feel less overwhelmed once you start knocking off entire monthly payments.
Understand the Parameters of Your Credit Card Debt
Before you can begin diving in and paying off this debt, you need to understand the parameters of your credit card debt. This means that you need to know how to calculate credit card interest. According to Lantern by SoFi, you will be more equipped to “take advantage of the benefits your card has to offer without incurring debt” if you understand how this number is calculated each month. An informed credit card user will be in the position to make the best decisions about paying off debt.
Consider a Debt Consolidation Loan
You may also want to consider a debt consolidation loan. These personal loans combine your account balances across all cards into one loan with a single payment. The funds from the loan are used to pay off your credit card balances, leaving you with just one payment to worry about. This can be a good idea as credit card interest rates are generally higher than other types of rates. It also simplifies your finances each month since you are only dealing with one payment each month. Most people find that the terms are more flexible with a personal loan, providing more control of your finances.
Transfer Debt to Cards with Lower Interest Rates
A balance transfer credit card allows you to move balances from one or more cards to another card. Generally, the card that you are moving the debts to boasts a 0% introductory APR for balance transfers. This is probably a good move if you know that you can pay off the entirety of the balance before the introduction period concludes, helping you to completely avoid paying costly interest fees. It is essential to read the fine print of the debt transfer before you make this decision. While it can be a prudent plan for some business owners, it can also end up costing you more in the long run if you are not careful.
You will achieve financial peace of mind if you know that you have a plan in place to tackle paying off your credit card debt.
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