If you are carrying multiple credit card debts, you’re definitely not alone. According to a survey, fellow Americans have over $1 trillion of credit card debts on their shoulder.
The situation looks pretty messy. But if you are gear up with the right tools and knowledge, you can easily overcome the hurdle of credit card debt.
Here’s how to consolidate your multiple credit card balances quickly and without any hassle.
1. Target one debt at a time
Make sure you pay at least the minimum on each of your cards every month. Then, concentrate on paying off the total balance on one particular card.
You can choose that first card to pay off in two ways:
a. Consider the interest rates – Check your credit card statements and choose the credit card with the highest interest rate.
b. Consider the total balance – Check your credit card bills, and select the card with the smallest balance first. Do not forget to make minimum payments on other cards.
2. Keep your credit cards out of your reach
In simple words, try to limit your credit card usage as soon as possible. Keep them away from you, so that you can’t be tempted to use them for the time being. Follow this method until you have totally get rid of your outstanding credit card balances. You should use cash instead of credit cards for your purchases, it’ll help you to lower the habit of overspending.
Keep calm and start following this method, within a few days you’ll be thinking twice before spending money unnecessarily.
3. Use balance transfer cards to consolidate your debts
Tired of paying high-interest charges on your credit card debt? Fear not, you can transfer high-interest credit balances to a single credit card with the help of a balance transfer method.
A balance transfer card may help you to pay 0% interest on your already transferred credit card balances for a fixed amount of time. This way you will be able to make payments toward your principal balance sooner than you have expected.
A balance transfer method is one of the most popular and effective credit card consolidation methods available in the market. Balance transfer cards may also offer daily rewards and points.
The 0% introductory APR on balance transfer cards may extend from 60 days to 15 months. After the 15 months, the interest rate will be increased, so make sure you pay off the balance within that offer period.
4. Reprioritize your budget and reduce high balances
You should categorize your monthly expenses like food cost, transportation, groceries, housing, entertainment, and other minor costs. You may use your credit card statement to analyze your expenses. Many credit card providers may categorize your spending and include calculation on your bills. Track your spending at least for 2 weeks, you’ll have an idea about where your money is going.
Your next step would be checking out for categories where you can cut off your expenses. Once you figure out the expenses, start spending responsibly and map out a plan to decide how much you want to spend on each card.
Once you start cutting off your expenses, use the surplus (saved) money and apply it to pay off your multiple credit cards.
High credit card balances can trigger high credit utilization. So, It’s wise to keep your card balances as low as possible. This habit may establish yourself as a responsible customer and in future, you’ll get more offers from the lenders and credit card providers.
6. Get a debt consolidation loan
Another good way to consolidate your credit card debts is to take out a low-interest loan. You can opt for a personal loan, a loan against your insurance policy, or a home equity loan to pay off your credit card debts. It makes sense to take out such loans if you can get an interest rate lower than credit cards.
But do remember few facts. You should have a proper dedication to pay off the new loan as soon as possible.
If you stretch the new loan payments over a longer time, you might end up paying more interest, even if the new rate is much lower than your multiple credit cards.
5. Set up a repayment strategy
You can use different debt payment strategies to initiate credit card consolidation process. The strategies may include:
Debt snowball – With the snowball method, your credit cards will be paid off with the smallest balance first. Experts suggest, if you eliminate your smallest credit debts first, it may give you enough courage and confidence to handle the rest of the credit balances.
Debt avalanche – This method may help you to pay off the balances with the highest interest rates first. By desperately paying down your highest interest credit debts first, you may save thousands on interest charges in long run. Stick to this strategy if you want to save more on your credit card balances.
Debt Tsunami – This method involves paying off your credit card debts as per the order of their emotional impact. So, this way you may pay off the balance first that gives you the most emotional pain.
Debt consolidation program – If you are getting confused about all the above-given methods, and seek expert opinion, you may enroll in a debt consolidation program and consolidate your credit card debts. Through a credit card consolidation program, you can manage multiple high-interest credit cards balances by making a single payment per month.
People may have a mixed opinion about these debt payoff methods. While paying off the highest interest credit card first is logically right, the best method is whichever suits you as per your current situation. Some people believe on figures and some don’t. So, it is up to you, choose the method that will serve your purpose best!!