This includes utilities, cell phone, streaming services, and any other recurring payments that are on your credit card. Move all automatic payments to your debit card or bank account.
Let’s go! Step-By-Step Guide To Pay Off Credit Card Debt Forever Step 1: Stop Using Credit Cards For Anything “Am I ready to stop buying what I cannot afford and make this change forever?” This is going to take a REAL commitment to change your money habits and NEVER get yourself in this mess again. There are no “get out of debt” pills that magically make it go away. Always.Īnd now that you know what got you here in the first place, it’s time to create an action plan to get out of the debt cycle once and for all.īut please, DO NOT READ THIS is you are not serious about getting out of debt. I think we can all agree that credit card debt is bad.
Best budget apps 2018 for paying down credit card debt how to#
So just file this one away as MYTH BUSTED, and never borrow money again to “boost your credit score.” How To Pay Off Credit Card Debt.
someone paying off their balance EVERY MONTH are treated exactly the same way. The score reflects your ability to handle your money obligations (payments, debt, etc).Īnd someone making the minimum payment vs. Your credit score can be a bit complicated, but the bottom line is that someone lending you money wants to know if you will make your payments, or not. But Isn’t Carrying A Balance Good For My Credit Score?īut seriously, this debt myth needs to be crushed, as it’s a mindset that can keep you in debt forever. Let’s take the average $4,000 balance and see how paying the “minimum payment” works out.Ī quick test using this calculator shows that a $4000 balance at 19% interest making the minimum payment will take 158 MONTHS to pay off, and you will pay $3,900 in interest! That is 13 years and DOUBLE the money for the convenience of owning something now instead of a little but later. It’s no wonder many people cannot seem to pay down their balance, because a HUGE percentage of their payment is going to interest alone. Her $400 in purchases would cost her over $800 in the long run. She would have paid at least $400 in interest alone had we not gotten on a budget plan to pay it off quickly. What she didn’t know was she was paying 20% interest on those purchases, and was on track to basically NEVER pay off the credit card. “the payment was still only $20, so why not? I’d rather pay $20 per month than give up $400 right now.” BOOM! She was now in credit card debt.Įventually, she ballooned the balance to its maximum of $400, because Once she found out it was only $20, she immediately bought $100 worth of merchandise with no second thought. So she signed up for a store card and asked the ill-fated question “what’s the minimum payment?” She wanted to buy something from Nordstrom, but didn’t have the money. Hint: This goes for ALL debt.Įxample: My lovely wife got her first credit card when she was 18 years old. Most credit card debt is the result of purchasing something you can’t actually afford, while only looking at the minimum payment. The only way to pay off credit card debt problem is to start at the very beginning. That means not only are most people in the hole over $4,000, they are paying over $60 per month in interest alone.
This means the average consumer has over $4,000 on their credit card that rolls over, charging interest EVERY MONTH.Īnd the average credit card interest rate is over 19%. Ever.Īs of 2018, almost 2 out of every 3 Americans (59.4%) use a credit card, and the total credit card debt reached a staggering $799,000,000,000 ( according to Experian)! The average balance per person on their credit cards is $4,239. Bonus Step: How To Avoid "Emergencies" And Never Get Back Into Credit Card Debt.Step 4: Create A "Payoff Plan", Starting With The Smallest Balance (Debt Snowball Method).Step 3: **MOST IMPORTANT STEP** Get On A Budget!.Step 2: Tally Up Your Total Balance On Each Card.
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