You filled out the application, got approved, and received your card in the mail. You made some purchases … then...
The holidays are over and you overdid it. Not just the dining, the drinking, and the driving all over town, but the debt. You overspent a bit and maybe added more to your credit card balance than planned. And if you carried a balance before the holidays started, the interest is piling up faster than those trashed gift boxes and the torn wrapping paper. Here are ten ways to consolidate your debt and pay it off faster:
- Consolidate onto a lower interest credit card: If you have to pay overtime, do it at a lower interest rate. A little research combined with your good credit rating can get you a card with a lower interest rate for a year or longer.
- Personal loan: Good-to-excellent credit gets you a personal loan with low-interest rates. Pay off the debt and repay the loan with a single payment each month, instead of tracking all those credit card payments.
- Debt management: If you’re paying down the debt, but you’re not making much progress, consider using a financial counselor and restructure not only your debt but your spending and savings until the debt is repaid.
- Remove the temptation, close the credit cards? Maybe not the best idea, because closing those cards, especially the long-term accounts, affects your credit score. If this isn’t the first time you’ve experienced credit card trouble during the holidays, or anytime during the year, consider freezing your cards; some credit card issuers allow this. Or place them in your freezer and keep them on ice. They have to thaw before use, providing time to rethink your spending spree.
- Second job: Pay down your debt with more money; work more hours at your current job or find a temporary second job, and throw the extra money at the debt.
- If your debt is spread on several credit cards, pay down those with the highest interest rates first: Interest is your money paid to use your own money. Getting rid of those debts cuts your interest rate losses faster. Or use the snowball method: pay off the credit card with the lowest balance first while making minimum payments on the others, then move on to the next lowest card and continue until all are paid.
- Look at your spending: Money for that planned vacation, major furniture, or sporting goods buy needs redirection to your debt. Cut spending where you can; even a few dollars a week saved on switching from brand name to generic grocery products, giving up the daily coffee run or weekly beer-and-burger night with friends helps lower your debt.
- Call your credit card company: A long-time customer has influence, and speaking nicely to the right person may result in a lower interest rate. The issuer wants their money, but they also want to keep you as a customer, and they may work with you.
- Sell what you don’t need anymore: Check the community digital and newspaper bulletin boards for upcoming rummage sales. Rent a space, declutter your house, sell the stuff, and put the money towards the debt.
- When your tax refund arrives: It’s not free money to spend, it’s money to use for debt repayment.
When you need local banking help, Marine Federal Credit Union is here to assist with a variety of checking and savings accounts, credit cards, lines of credit, mobile banking, investment services and personal, mortgage, auto, student and home loans. We offer financial education workshops, counseling, debt management and webinars to help you resolve your debt issues and maintain solid financial health. Contact us for more information and appointment availability.