Life changes might make accumulating credit card debt unavoidable, but paying it off as quickly as possible is important for one’s financial future. Working to eliminate debt will result in lower overall payouts in interest. In addition, paying down debt lowers one’s debt to income ratio, which leads to an improved credit score. Some of the ways to pay off debt faster could require making sacrifices, but the alternative might mean facing harassment from creditors, wage garnishments and long-term damage to one’s credit.
Figuring out which credit card has the highest interest rate and putting as much money as possible into paying it off first will help reduce the amount of money a person loses to interest on outstanding balances. This does not mean neglecting making minimum payments on other cards, however, because that could lead to late fees and other problems. Applying for a lower interest card or making balance transfers to accounts with lower rates could also save money, allowing more of each month’s payment to go to the principle debt instead of interest.
It can be hard to come up with more funds to put toward debt, but cutting back on non-essentials like dining out may help in the end. In addition, updating one’s W-4 in a way that limits tax returns also creates more money to include in monthly card payments.
Despite one’s best efforts, sometimes credit card debt plus other expenses, loans and financial obligations make it impossible to eliminate debt in a reasonable time period. In these cases, filing for bankruptcy could be the best solution for regaining control of finances. An attorney could assist with the process by letting people know if they are eligible for bankruptcy, which may provide relief from overwhelming debt.
Source: USA Today, “Personal Finance: How can I pay off credit cards faster?“, Robert Powell, September 02, 2014