Your debt could be several years old or brand new as a result of an unplanned financial event – like a major car repair. In all cases, carrying accumulated debt should be avoided at all costs as the interest payments on the principle, anywhere between 15%-20%, will increase your payback tremendously and eat up already finite budgets. Here are a couple of easy steps to help catch up on accumulated debt.
1. Step one must be to stop using that card immediately and not to add any more debt to that card.
2. Next, find a way to lower the credit card interest rates. If you’re carrying two or more credit cards, consolidate the debt onto the card with the lower rate. If your current credit cards simply don’t have favourable rates, there are plenty of cheap credit cards available which will be happy to have your business. These cheap credit cards may even offer a sign up promotion with little or no introductory interest rates for the first several months. If so, this is the best time to catch up on your debt payments.
3. In all circumstances, make sure that you are paying more than the minimum payment every month to avoid penalties on top of the interest payments, while eating away at the debt as quickly as you can. You can approach your bank about setting up an automated payment plan so you will know exactly how much is being paid off each month without missing a payment and how long it will take you to pay off the debt.
4. Paying off your accumulated credit card debt should take precedence over all your other non-essential payments until the debt is gone. Why should your hard earned money go to the credit card companies in the form or interest payments when you can be saving that money to work for you?