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If you’re carrying serious credit card debt — like $15,000 or more — you're not alone. The average household with revolving credit card debt — that is, debt that they carry from one month to the next — had more than $7,000 worth of revolving balances in 2019. That's just the average. It's not at all uncommon for households to be swimming in more that twice as much credit card debt.
But just because a $15,000 balance isn't rare doesn't mean it's a good thing. Credit card debt is seriously expensive. Most credit cards charge between 15% and 29% interest, so paying down that debt should be a priority.
However, dealing with a five-digit credit card debt can feel overwhelming. Coming up with that kind of cash is daunting, but there are steps you can take to manage a heavy debt load:
1. Stop charging
If you’re used to relying on your credit card to make your day-to-day purchases, cutting yourself off from charging might be really tough at first. But to get out of a hole, you’re going to have to stop digging.
It is essential to stop adding new debt by switching to cash or debit as soon as possible. If you know you’ll be tempted to charge, consider taking drastic steps: Cut up your card, or hand it over to a trusted friend or family member so that you won’t have easy access to it. Just do whatever you have to do to stop the bleeding.
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One of the worst things that you can do when you’re in credit card debt is pay only the minimums. Minimum payments equate to only 2-3% of the balance owed on the card, so if you don’t start upping your monthly payments, you’re going to be in debt for a very long time. This also means that you’ll be shelling out thousands in interest.
Paying at least double the required minimum payment every month will speed up your debt repayment plan substantially, but more is obviously better. Cut expenses in other areas to throw cash as possible at your plastic – it may be a sacrifice now, but the money you’ll save on interest by cutting down your debt as fast as possible will be well worth it.
If your credit score is good enough to allow it, it’s a smart idea to transfer your high-interest credit card debt to a lower-interest card. This will speed your debt repayment quite a bit, because you’ll be paying off the principle and any interest charges you’ve already accrued — new interest charges won’t be piled on every month, at least for awhile.
» MORE:Best balance transfer credit cards
4. Look into consolidating
If your credit card debt is spread between several high-interest cards, consolidating them all into a low-interest loan might be your best bet. Not only is it easier to deal with only one monthly payment, but if you choose your consolidation vehicle carefully you’ll also be paying a much lower interest rate. But this is where it’s important to be careful: Your consolidation loan’s interest rate needs to be lower than the lowest interest rate on your cards. Otherwise, consolidating isn’t worthwhile.
» MORE:Best debt consolidation loans
5. Consider credit counseling
If you’re feeling anxious and stressed about your credit card debt and can’t seem to get it under control no matter what you do, it might be time to consider credit counseling. Nonprofit credit counseling agencies will examine your whole financial situation and make specific recommendations based on your needs. Just be sure to work with a reputable agency, and commit to following the advice they provide.
» MORE:How credit counseling can help you
The takeaway: If you’re drowning in credit card debt, don’t despair. It may not be easy, but you can take steps to tackle your outstanding balance. With a stiff co*cktail of patience and discipline, you’ll be debt free sooner than you think!
A balance transfer works when you need $15,000 or less and can pay it off in 21 months or less. If you have more debt, you may need to consider other options, such as a personal loan, for the excess. Expect a loan to carry rates between 12% and 25% APR, according to NerdWallet data.
It's not at all uncommon for households to be swimming in more that twice as much credit card debt. But just because a $15,000 balance isn't rare doesn't mean it's a good thing. Credit card debt is seriously expensive. Most credit cards charge between 15% and 29% interest, so paying down that debt should be a priority.
If you're saddled with credit card debt, you're not alone — the average American household has more than $6,000 in revolving credit card balances. But with a good payoff plan, you can be debt-free sooner than you think without hurting your credit.
It will take 32 months to pay off $15,000 with payments of $600 per month, assuming the average credit card APR of around 18%. The time it takes to repay a balance depends on how often you make payments, how big your payments are and what the interest rate charged by the lender is.
Chapter 7 bankruptcy: This fairly quick legal process can wipe out your unsecured debts through what's called a “discharge.” Chapter 13 bankruptcy: Chapter 13 can also result in a discharge, but typically only after you complete a 3-5 year repayment plan.
If your total balance is more than 30% of the total credit limit, you may be in too much debt. Some experts consider it best to keep credit utilization between 1% and 10%, while anything between 11% and 30% is typically considered good.
There are a couple ways credit card debt can damage your credit score: High balances: A major factor in your credit score is your credit utilization ratio (your credit card balances divided by their credit limits). Once this number gets above about 30%, it's bad for your credit.
On average, Americans carry around $5,733 in credit card debt, according to TransUnion's latest report. But when you break it down by age, most carry more than that.
Likewise, millennial consumers (ages 25 to 40) have an average of $27,251 in non-mortgage debt, presumably across credit cards, auto loans, personal loans and student loans.
Debt-to-income ratio is your monthly debt obligations compared to your gross monthly income (before taxes), expressed as a percentage. A good debt-to-income ratio is less than or equal to 36%. Any debt-to-income ratio above 43% is considered to be too much debt.
While it's highly unlikely that any credit card company will forgive 100% of your debt without it being part of a bankruptcy, you may be able to negotiate a settlement with your lenders in which they forgive a percentage of the balance you owe.
Are there government credit card debt relief programs? Currently, there are no government-sponsored or government-backed programs that provide credit card debt relief to consumers. For example, unlike what you see with federal student loans, you cannot apply to have credit card debt forgiven without penalties.
Most credit card companies won't provide forgiveness for all of your credit card debt. But they will occasionally accept a smaller amount to settle the balance due and forgive the rest. Or the credit card company might write off your debt.
But if you need to transfer $11,000 of credit card debt, that "good" limit isn't quite good enough. This is a problem common to many people with small business credit cards. A $15,000 credit limit is objectively good.
If you want to pay off debt more quickly, you'll need to make extra credit card payments and pay above the minimum. Let's say you had that same $10,000 credit card debt at 18% interest mentioned above, and you made a $350 payment every month until it was paid off. In that case, you'd be free of your debt in 38 months.
By making a credit card payment 15 days before your payment due date—and again three days before—you're able to reduce your balances and show a lower credit utilization ratio before your billing cycle ends. That information is reported to the credit bureaus.
Introduction: My name is Lakeisha Bayer VM, I am a brainy, kind, enchanting, healthy, lovely, clean, witty person who loves writing and wants to share my knowledge and understanding with you.
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