By Mary Jo Terry, Managing Partner at Yrefy
While some of the baby boomer generation has been able to reap benefits from low interest rates and inflated housing prices, this hasn’t made them immune to debt. In fact, data from LendingTree found that boomers are the most burdened by credit card debt, with around 81.4% of boomers having credit card debt (the most of any generation) and the overall highest balance of any generation, around $4,000. Right now, it’s even more dangerous than ever to have credit card debt. Interest rates have risen to 19.04%, making monthly payments more expensive during a financially difficult time. Here are 3 tips on how to pay off your credit card debt faster:
Know your debt
While this might sound like a simple tip, not many people know the actual total amount of their credit card debt, they usually know a ballpark number. Sit down and figure out just how much credit card debt you actually have, how much is on each card, what the interest rate is for your cards, etc. Knowing the exact amount of credit card debt you have might be scary, but it may be more or less than you expected and is crucial to getting you on track to reduce and pay it all off.
Noticing what you’re spending most of your money on can also help you prioritize for the future and provide you with crucial insight into what most of your money is spent on. This can help with future budgeting tactics.
Decide your payday order
Now that you know how much credit card debt you have and what card has the most to the least, prioritize which cards should be paid off first. A good way to do this is by finding out the interest rates of each card and paying off the cards with the highest interest first, while making the minimum payments on your other cards. Put any extra money you can spare each month onto these cards, whether it’s $2 or $50. Paying off cards with a high interest rate can save you money in the long run.
You can also decide to tackle cards with the most amount of debt. The most important part is deciding on a plan or strategy that you can stick to and will be the most effective for you.
Take out a loan
If you have an overwhelmingly large amount of credit card debt and feel like you’re drowning in payments because of interest, consolidate all (or most) of your credit card debt into a personal loan. These oftentimes have much smaller interest rates than credit cards which can save you money and make it easier when you pay each month so you aren’t trying to juggle multiple cards and multiple payments. Personal loans will give you a fixed amount of money over a fixed time period at a fixed rate, meaning your monthly payments shouldn’t change and you’ll know exactly how long it will take you to pay off all of your credit card debt.