Our top picks of timely offers from our partners
You’re not alone if you have credit card debt: a record $1 trillion is owed by Americans. 08 trillion on their credit cards, with an average balance that exceeds $6,300, according to credit reporting firm Experian.
Having a high balance undermines the benefits of your card’s rewards program, damages your credit score, and increases your debt load. Additionally, with credit card interest rates at all-time highs, it may be more difficult than ever to escape debt.
In this section, CNBC Select examines the most effective strategies for reducing your credit card debt, regardless of the number of cards you have.
Using a balance transfer credit card
By moving debt from high-interest credit cards to a balance transfer credit card, which offers 0% interest for up to two years, you can avoid crippling interest rates.
Should you require an extended period to settle your debt, the Citi Simplicity C2%AE Card provides a 200 percent intro APR for the first twenty-two months of your account and a 3 percent intro fee when you transfer within the first four months of your account opening. After the introductory period, theres a 19. 24% – 29. 99% variable APR on balance transfers.
-
Rewards
None
-
Welcome bonus
None
-
Annual fee
$0
- Introduction APR 0% Intro APR for 2021 months on balance transfers from the date of the first transfer and 200 percent Intro APR for 2012 months on purchases from the account opening date
-
Regular APR
19.24% – 29.99% variable
- Balance transfer fee: An introduction of the balance transfer fee is available. It is 3% of each transfer (minimum $5) that must be finished within the first 4 months of the account opening.
-
Foreign transaction fee
3%
-
Credit needed
Excellent/Good
- Terms apply.
The Wells Fargo Reflect C2%AE Card is an additional option. It charges 200 percent annual percentage rate (APR) for the first twenty-two months of purchases and qualifying balance transfers made within the first sixty days of opening the account, then (2018) 24%, 24. 74%, or 29. 99% variable APR thereafter. See rates and fees).
-
Rewards
None
-
Welcome bonus
None
-
Annual fee
$0
- introductory APR of 0% for the first six months after the account is opened, on purchases and qualifying balance transfers
- Regular APR18. 24%, 24. 74%, or 29. 99% Variable APR on purchases and balance transfers.
-
Balance transfer fee
5%, min: $5
-
Foreign transaction fee
3%
-
Credit needed
Excellent/Good
This tactic has some drawbacks, such as the inability to transfer balances between cards issued by the same bank and the usual caps on amount transfers on balance transfer cards. Furthermore, you must have a good or excellent FICO credit score of at least 670.
Before submitting a transfer application, make sure to read the fine print.
Consolidating debt with a personal loan
A personal loan gives you cash over a set period of time and typically has a fixed interest rate that is less than the annual percentage rate (APR) of a credit card if you don’t want to add more credit cards.
Your eligibility for a loan that pays off your entire credit card debt may depend on your credit score. Additionally, it will be simpler to manage if you combine your debt into a personal loan if it is dispersed across multiple credit cards.
Happy Money, which has an APR of 11%, was rated by CNBC Select as one of the greatest personal loan choices. 72% to 24. 67%. To be eligible for a loan even if you don’t have excellent credit, applicants must have a fair credit score of 580 or higher.
-
Annual Percentage Rate (APR)
11.72% – 17.99%
-
Loan purpose
Debt consolidation/refinancing
-
Loan amounts
$5,000 to $40,000
-
Terms
2 to 5 years
-
Credit needed
Fair/average, good
-
Origination fee
0% to 5% (based on credit score and application)
-
Early payoff penalty
None
- Late fee of 5% of monthly payment amount or $15, whichever is higher (with 2015-day grace period)
LightStream provides APRs as low as 7, making it a desirable choice if you’re attempting to pay off high-interest credit cards. 49%. A minimum FICO credit score of 670 is required, but LightStream doesn’t charge origination or late fees.
-
Annual Percentage Rate (APR)
7.49% – 25.49%* APR with AutoPay
- Loan purpose: home improvement, vehicle financing, debt consolidation, medical costs, and other
-
Loan amounts
$5,000 to $100,000
-
Terms
24 to 144 months* dependent on loan purpose
-
Credit needed
Good
-
Origination fee
None
-
Early payoff penalty
None
-
Late fee
None
Terms apply. *AutoPay discount is only available prior to loan funding. Rates without AutoPay are 0. 50% points higher. Excellent credit required for lowest rate. Rates vary by loan purpose.
Borrowing money from family or friends
You might find it difficult to be approved for a personal loan or balance transfer card if your credit score is less than 580. If you’re considering asking a friend or family member for a loan, be sure to arrange a repayment schedule before taking out any credit. And adhere to it in the same way that you would a bank loan to avoid jeopardizing your relationship.
Paying off high-interest debt first
It’s a good idea to use the avalanche method if you have debt on multiple cards. This involves paying off the balance on the card with the highest interest rate first, then moving down the list from highest to lowest APR.
Additionally, you can combine methods by opening a balance transfer card with a $200% introductory annual percentage rate. Pay the minimum amount due on your balance transfer card and pay off any outstanding balances on your high-interest credit cards first. Take a more aggressive approach to your balance transfer card once the high-interest card has been paid off.
Similarly, pay off high-interest balances first if you have consolidated debt using a personal loan or a loan from family or friends.
Paying off the smallest balance first
Another option for paying off debt is the snowball method, which entails starting with the card with the lowest balance and working your way up.
According to the theory, paying off a credit card balance makes you feel accomplished and motivates you to keep managing your debt. The snowball method is typically not advised by financial advisors because it can result in higher interest costs than paying off high-interest credit cards first.
Ultimately, the most crucial step is to develop a debt repayment strategy that you can follow. If you can pay off a credit card with a lower balance in full over time, that might be the best option for you. You should continue to pay the minimum amount due on your other cards even if you choose to use the snowball method.
Money matters — so make the most of it. Receive professional advice, news, tactics, and other resources to help you make the most of your finances straight to your inbox. Sign up here.
In the modern world, credit cards are a need, but they can also be a benefit if you manage your money well and pay off your balance each month. However, there are ways to extend the time you have to pay off credit card debt while also lowering your interest rate if you find yourself drowning in it.
Why trust CNBC Select?
Our goal at CNBC Select is to empower our audience to make wise financial decisions by offering them thorough consumer advice and excellent service journalism. Our staff of knowledgeable writers and editors who have a wealth of experience with credit card products provides thorough reporting as the foundation for each review. Although CNBC Select receives commissions from affiliate partners on a number of offers and links, we take pride in our journalistic standards and ethics and produce all of our content independently of our commercial team or any other outside parties.
Stay informed by watching CNBC Selects’ in-depth coverage of credit cards, banking, and money, and by following us on Facebook, Instagram, Twitter, and TikTok.
Read More :
https://www.bankrate.com/personal-finance/debt/alternative-ways-to-pay-down-credit-card-debt/
https://www.cnbc.com/select/how-to-pay-off-credit-card-debt/