SEATTLE, WA--(Marketwired - Jul 25, 2014) - Soaring credit card debt can be a real issue for many people. Faced with high interest rate balances on several cards, credit card debt can cause real stress and financial difficulties for consumers who are facing it.
Today, CreditCardChaser.com, a leader in providing information on credit cards and credit issues, announced the best ways consumers can pay off their credit card debt. To many people facing high credit card balances, figuring out how to address the debt can be difficult. With that in mind, CreditCardChaser.com has compiled a list of strategies consumers can utilize to make their debt a thing of memory.
1. Pay Credit Card Balances from Smallest to Largest
While many advisers will suggest attacking the balance with the highest interest rate first is the best approach, it is easy for people overwhelmed with debt to get discouraged if that is not also the smallest balance owed. The success people feel when they've paid off a balance is often enough to help them keep going. With this strategy, the smallest balance is paid off first, followed by the next and so on.
2. Pay Credit Card Balances Arranged from Highest Interest Rate to Lowest
The strategy normally recommended works for consumers who receive motivation by looking at the numbers involved. By attacking the highest interest rate account first, consumers reduce overall debt load more quickly. People who employ this approach understand that ridding themselves of the highest interest rate credit card balances first help their credit scores improve faster as their overall debt to income ratio decreases.
3. Transfer High Interest Debt to a Card Offering a Lower Rate
This method can work for some people, but consumers must keep several things in mind before using this strategy. First, transfers can and often do involve fees, so calculate the potential interest savings while taking into account any fees. Second, opening a new credit card account can lower your credit score. Before employing this approach, CreditCardChaser.Com suggests sitting down and doing a careful risks vs. benefits analysis and devising a well-thought out plan. For example, if the new credit card has a six-month introductory period with zero percent interest, divide the high interest amount by six to plan to pay off the balance without more interest accruing.
4. Leave Credit Card Balances Where They Are
After a careful review, consumers may find that leaving balances where they are at makes the most financial sense. If that is the case, choose a strategy to address them in turn.
4. Dip Into Savings to Pay Off Debt
If you have money in your savings account, consider using some of it to pay off high-interest credit card debt. For people who are overwhelmed by credit card debt, this can be an option for some relief. The danger, of course, is that an emergency can occur forcing people who choose this option to borrow money, leading to new debt. For that reason, CreditCardChaser.com recommends trying to keep a minimum balance of $1000 in savings just in case. When debt is paid off, the focus should then return to rebuilding savings.
5. Build a Healthy Emergency Fund
Building a healthy emergency fund, defined as at least three to six months worth of expenses, can be critical. Having savings that can be quickly accessed in this manner can prevent the need for individuals amassing more credit card debt. Building an emergency fund and maintaining it should be a goal of every person who succeeds in becoming debt free.
CreditCardChaser.com is an expert site focusing on credit cards, credit and debt information and education designed for consumers. For more information about how to pay off credit card debt, their site can be accessed at www.CreditChaser.com.