Credit card debt is among the worst types of debt that you can have.
That’s because of the insanely high fees that credit card companies charge when you don’t pay your monthly balance in full. (These fees are called APRs, which stands for annual percentage rate.)
A typical credit card company will charge from 15% to 30% APR on your monthly balance. If you carry a large credit card balance, you could be looking at hundreds of dollars per month in credit card fees.
The worst part is that many people get stuck into a trap where they become so far in debt that they are only able to pay their minimum payment each month. This leads to a never-ending cycle of interest fees piled on top of a credit card bill that never goes down.
When you only pay the minimum balance, you could be paying your credit card bills for the next 30 years. And your bank could easily collect $30,000 in interest fees, or more, in the process. That’s $30,000 of your hard-earned money, getting thrown away to credit card fees.
Banks literally collect billions of dollars in fees from these types of unfortunate situations. Don’t let that happen to you.
Here are some tips for paying off your credit cards, or restructuring your debt so that you can minimize the fees you pay and reduce the amount of debt you have over time.
1. Transfer the debt to a no balance transfer fee card
Many credit cards offer no balance transfer fees, no APR for an introductory period, and no annual fees. Check out NerdWallet’s list of the best no balance transfer fee cards.
By transferring your high-interest credit card balance to one of the cards in the above list, you’ll save thousands of dollars in interest fees, assuming you pay the balance down on time.
Pro tip: make sure to closely read the fine print on any new credit card application that you sign up for.
2. Take out a home equity loan line of credit (HELOC)
If opening up a no balance transfer fee card isn’t an option, and you own a home, taking out a HELOC might be your best bet.
A HELOC generally charges much lower APRs than your credit card company does. For example, if you owe $10,000 in credit cards, you could take out a $10,000 mortgage equity loan, and then pay off your credit card balance in full.
Then, you have to pay back your mortgage lender for this loan, and usually at a much lower interest rate that will save you thousands of dollars over time.
3. Stop using your cards
If your credit card bills never seem to go down, there is really only one way to stop the bleeding.
Leave the cards at home, or destroy them.
It might mean cutting back on your grocery spending, or making other sacrifices like not going out to dinner, or not buying those new sneakers that you wanted.
The fact of the matter is that unless you stop using your cards, you’ll always be in debt.
4. Find a side hustle
Another way to get out of credit card debt is to find a side hustle and then use that new income stream to pay off your credit cards.
Some side hustle examples include driving for Uber, dog walking, or doing odd jobs. Here’s a helpful list of best side hustles if you want to learn about more options.
Your journey to a debt-free life
Everyone has different bills and loans to pay off. Remember to stay focused on the prize: being debt-free, so that you can live life the way you want.
