Getting Out of Credit Card Debt
Credit card debt is often the most expensive form of debt due to high interest rates. Understanding how your monthly payments impact your overall balance is the first step toward becoming debt-free.
The Minimum Payment Trap
Only making the minimum payment on your credit card is designed to keep you in debt for as long as possible. Because a large portion of your minimum payment goes toward interest, your principal balance barely decreases each month.
Strategies to Pay Off Cards Faster
- Pay more than the minimum: Even an extra $20-$50 a month can shave years off your payoff timeline and save you hundreds in interest.
- Stop using the card: To get out of a hole, you first have to stop digging. Shift to cash or debit for your daily purchases.
- Balance Transfers: Moving debt to a card with a 0% introductory APR can save you massive amounts of interest, provided you have a plan to pay it off before the promotion ends.