Having a large amount on a high-interest card could be disturbing. Minimum monthly payments only slightly decrease the balance and paying the debt off seems last for ages. You do not need to be an expert in finances to realize that high-interest rate debt drags you down and endangers your financial well-being.
How to get rid of this financial burden? Start the debt management as soon as possible to get back your financial freedom. Here are some ways to repay the high-interest rate debt.
Find a Lower Interest Loan
A person often cannot make any progress with paying off the balance because too much money is spent on monthly interest expenses. Taking a loan with a lower interest could help you to pay down your debt. Replacing one loan with another one will not improve your finances in short term. However, you will surely feel a little relieved when your monthly interest payment becomes lower. You might need to make a little research on how to get a loan approval if you already have a debt. This will increase your chances to replace your debt with the one with better conditions.
Transfer the Balance
If the amount of your debt is large and cannot be covered by another loan, transferring the balance to a lower interest credit card may become another solution to lower monthly interest payments. The fee for a balance transfer depends on the total amount of your transfer. Make sure you will save more on the interest rate payments than spend on the transfer fee.
The balance transfer calculator will help you to count if this action makes sense. Remember that after the transfer your interest rate will be lower only for a limited period of time. Choose this option if you can repay the amount during this set period.
Pay Off the Smaller Debts First
Repaying the debt that has the highest interest as quickly as possible is a common strategy but it may not be the most suitable for your situation. If you have smaller debts, it might be a good idea to repay them first. It may become a way to free up some money for your larger debt. Think which smaller balances you may pay off now and in the nearest future. Once you get rid of them, do not forget to pay monthly the same amount of money on the debt that left.
Lower Your Expenses
Living on a budget for while may bring some extra money for repaying your debt. Refusing from a few small things could make a big difference in the end of the month. Reduce your expenses on cigarettes, alcohol, eating out, and online shopping. Here are more tips on how to cut household and food costs.
Try to spend a month without cable television and choose a less expensive cell phone plan. Saving a few dollars on each of these things will help you to have a decent amount of extra money in total. Spend them on returning your debt faster.
Pay More Than a Minimum
If you want to make a progress in returning your debt, try to pay monthly more than a minimal amount. Spend a possible minimum amount to cover all of your other debts and pay as more money as you can on the high-interest rate debt. Your task is not only to pay the interest but also decrease the balance as much as you can. Minimum payments may not allow doing that. Paying all the extra money you have on this debt will give you a chance to save on the interest payments on the long run and repay your debt earlier.
Choose the methods that suit your situation the most and focus all of your efforts on returning the high-interest rate debt. Once the finances improve and you pay the largest part of the balance, it may be tempting to spend money on something else. Remember your goal and keep paying it off to make your debt-free future come closer.