1. Pay more than the monthly minimum requirement
When you’re struggling financially, it may seem impossible to squeeze out any more than the minimum required credit card payment each month. Paying only the minimum, however, lengthens the process of eliminating your debt. A better option is to find expenses within your budget that can be cut and put that money toward your credit card payment. Habits like eating out or making coffee trips can really add up. Those small sacrifices can really aid in alleviating your credit card debt.
2. Switch to a credit card with a lower interest rate
Since interest can be a substantial part of what you’re paying on your credit card each month, make sure the card you’re using doesn’t have an excessively high interest rate. This can prolong your efforts to pay off the credit card. If your card has an interest rate of 15% or higher, look into transferring your balance to a lower interest card. You may find special promotional offers for cards with low or 0% introductory interest rates. If you’re able to take advantage of one of these, transfer your balance and pay as much as you can each month. Reducing the interest cost is a great way to start paying off credit card debt.
3. Consolidate debt with loans or lines of credit
By consolidating your debt, you are bundling all of your outstanding debts into a single debt. Not only will debt consolidation help you better organize your monthly payments, but it should also allow you to pay less in interest than all your previous rates combined. Here are just a few ways you can combine and manage your debt:
- Apply for a debt consolidation loan, and then pay just the single monthly payment on your new loan
- Open a line of credit and pay off your outstanding loans with it
Compare credit card interest rates from CIBC
The key to avoiding a mountain of credit card debt in the first place is to be smart with your spending. Also, be sure you look for a credit card with a competitive interest rate. Should you need to pay less than the full balance in a given month, it’s best to position yourself to pay as little in interest as possible. For additional information about paying off credit card debt or for answers to your other questions about credit cards, contact a CIBC representative at 1-800-465-4653.