Paying with credit cards has become a way of life in America. Paying with plastic means fewer trips to the bank, but It can also mean building up high balances with high interest rates. If your balances are more than you can handle on your own, contact Achieve Loans. They’ll show you a number of strategies for paying off credit card debt faster.
Here are some do-it-yourself ideas as well.
Avalanche or Snowball Debt
If your total debt is less than 10% of your income, you can probably handle it on your own. There are two methods — the avalanche method and the snowball method — that will work for you.
With both methods, you make big payments to one card while making minimum payments to the others. When one card is paid off, choose another to concentrate on. With the avalanche method, you focus on the card with the highest-interest rate and pay it down first. With the snowball method, you pay your lowest balance first.
If you already have good credit, you may get offers for zero or low-interest balance transfers. With a balance transfer, you move some or all of your balance to a different card. There will be an initial period –often 12-18 months—where you’ll pay zero interest or a very low interest rate on that card. This method can save a lot of money as long as you pay off your balance during the no-interest period.
Pay Down Big Balances with an Achieve Home Equity Loan
It’s easy to run up a high balance during an emergency or when you’re on vacation. When your balance runs into tens of thousands, DIY methods are too slow. If you’re a homeowner, lowering credit card payments with home equity will be the fastest, least expensive way to get rid of that troublesome debt.
Lowering credit card payments with home equity is the best way to pay down debt when your balance runs into many thousands.
What Is a Home Equity Loan?
A home equity loan is similar to a mortgage – in fact, they are sometimes called second mortgages. When you take out a mortgage, you share ownership with your lender. As you pay down your mortgage, you acquire more equity –ownership share—in your home. A second mortgage is a similar, but much smaller, loan against some of your equity.
To decide if you’re a good candidate for a home equity loan, add up your total credit card debt. Next, add up your minimum payments for one month. Then, talk to a loan specialist at Achieve. She will be able to give you an idea of the interest rate and loan terms Achieve will offer you. Usually, Achieve’s monthly payment will be less than the total minimums on your cards. You’ll have a payment you can handle more easily, plus you’ll pay down your debt sooner.
Suppose you have $30,000 in credit card loans with interest rates of around 19%. The total of your minimum payments could be anywhere from $600 to $900 a month. It can take 25 years to pay them down, and you’ll be spending a lot on interest along the way.
If you refinance that debt with a home equity loan at 8%, your total monthly payment will be reduced to $363.98. The debt will be paid off after only 10 years. In the meantime, you’ll have more cash on hand so you won’t need to borrow to meet current expenses.
Now you have some strategies for paying off credit card debt faster. Decide which one will work for you and get started. It can save you thousands of dollars in interest payments.