6 Tips to Pay off your Credit Card Debt
Credit cards have entirely revolutionized the way people spend money in the 21st century. The evolution of currency dates backs to the Egyptian empire where people would exchange goods with each other as there was no specific currency, and this system of exchange was known as the Barter system. Gradually with progressing cultures and empires physical currency came into existence in the form of coins made out of precious metals, followed by paper currency.
The ultimate transition of currency is undoubtedly from paper to plastic. It might not appear like a big deal but credit cards have become an irreplaceable part of our day to day lives. Credit cards help us to manage our expenses efficiently but if used irresponsibly they can rapidly land you into massive debt traps that are extremely difficult to escape.
Credit card providers charge heavy rates of interests which often lead to disturbed finances and accumulation of debt. Paying outstanding credit card debt might feel overwhelming at first but is not as easy as it appears to be. Moreover, every individual is subject to different situations which makes it even more difficult to build a universal strategy for paying off outstanding credit card debts in the UAE. However, we’ve come up with hand-picked strategies to help credit cardholders clear their outstanding debts in the UAE.
Start off by Setting a Realistic Goal
In order to gid rid of your accumulating credit card debt, the foremost step is to set up a realistic goal. We all are well aware of the fact that it is a human tendency to run up balances in short frames of time, it takes determination and self-discipline to get rid of them. Keep a systematic track of your progress to make sure you don’t lose your path. Cardholders can make use of a plethora of online apps available easily that help you to keep a structured track of all the expenditure done by the cardholder.
Stop Using Your Cards
To get rid of the massive debt that has been accumulated it is extremely vital to make sure that you stop using your credit cards immediately. Take your cards out of your wallet and don’t carry them with you to make sure you are not tempted to spend using your cards. Don’t use them unless you manage to completely pay off your outstanding debts. Using paper currency to make payment for your purchases will help you to differentiate your needs and wants which is vital for clearing off outstanding credit card debts.
Prioritize Your Debts
The best way to clear off outstanding debts is to prioritize them. Debtors can start off by making a complete list of debts that includes ( outstanding debts, credit card debts, interest rates, overdrafts utility bills, etc,) and arrange them in the order of their priority. Typically payments of outstanding mortgages and vehicle payments top the list as delay in making them increase the probability of confiscation by the financial institutions.
However, an important thing to be considered here is that the priority list varies from person to person and a lot of people prefer paying off high-interest debts first as delaying their payments will increase the applicable interest on the debt. Based on your requirement you should prioritize and make payment of the outstanding debts.
The debt snowball method of clearing credit card debt is a tested strategy that is extremely useful. In order to clear the outstanding debts via the debt snowball method, the cardholder is supposed to make minimum payments on all your credit cards to avoid being late which will eventually lead to a drop in the credit score. The next step in the Debt snowball technique is to put additional cash towards the card that comes with the lowest balance by the time it’s completely paid off followed by other cards with next-lowest balances. Once you are done with the payment of the first card, you’ll have more cash to clear off the next card which refers to snowballing credit card payments.
Instead of juggling between multiple cards, you can opt for getting rid of balances and lay emphasis on one debt. Debt consolidation can be referred to as a type of personal loan which allows debtors to pay off their debts in one go and then gradually pay the loan amount in installments.
The primary benefit of choosing consolidation to get rid of outstanding debts is the rate of interest. The rate of interest applicable to personal loans is very less in comparison to credit card interest rate to almost 10% which means the debtor pays less than what they’re supposed to pay.
A balance transfer is another strategy that turns to be useful while clearing off outstanding credit card debts. The majority of credit card providers offer the facility of balance transfer in order to reduce or eliminate the accumulating interest over the debt.
Cardholders can use the option of a balance transfer to transfer outstanding debts of all cards into one card. Moreover, it works perfectly with one card also. However, one should keep in mind that the balance of the first card must not be higher than the total outstanding balance. If that happens cardholder will have to individually clear off the debts of all the cards.
Credit cards are undoubtedly excellent financial tools, but irresponsible usage can land the user into great trouble. With these tested techniques and tips you’ll definitely manage to clear off your outstanding debts without struggling.