Sometimes paying off all your debt might seem unrealistic. But according to an analysis by creditcards.com, the typical American household needs about 13 months to pay down the average debt of $8,195. But this is in case if you're investing 15 percent of your income toward your debt. American consumers are carrying an unprecedented amount of debt. According to NerdWallet’s annual analysis of U.S. household debt, credit card balances carried from one month to the next hit $443.96 billion in September 2019. Credit card debt has increased by almost 6% in the past year and more than 34% in the past five years. It doesn’t have to be that way. In fact, there is a small number of Americans that are entirely debt-free altogether. It does take patience and discipline to reduce the amount you owe to creditors, but it does not have to take forever. Debt carried over from one month to the next is revolving debt and usually incurs interest charges. The average U.S. household with revolving credit card debt has an estimated balance of $6,849, costing an average of $1,162 in annual interest. Many Americans will likely pay credit card interest for a long time: 10% of Americans with credit card debt say it will take them longer than 10 years to pay off debt, and 9% don’t think they’ll ever be completely free of it.
How to shorten the process of paying off debts anyway? You have to develop a certain strategy to be able to handle the situation before it will turn into an endless routine. Here are some things which may help you to fasten the process of paying off debt or reducing the number of it.
Ask for a lower interest rate.
Yes, exactly, you can simply ask your credit card issuer about reducing the interest rate. Before reaching out to customer support of your credit card issuer make sure you know your credit card terms, including statement due date and your current balance. Also, check out competing credit card offers. Once you find a similar credit card offer but with better conditions, reach out to your creditor and share this information with them. Also, make sure your credit is pretty healthy. You want to make sure you look creditworthy to the bank.
Pay extra every month
If you’re only paying a monthly minimum you won’t go that far. Instead, you’ll get stuck into debt for a long period of time. Try to pay extra, for example, pay two times more than you usually pay. Make paying off debt your priority and concentrate on paying more than required.
Prioritize the most expensive debts
It might sound strange, but actually paying the most expensive credits first might be the smartest strategy because you can speed up the entire repayment process as you save money on interest rates.
Consolidate all your debts
It can be hard to keep up with several debts that have several different due dates and several different minimum payments. That’s why you can combine all your debts into one monthly payment, which simplifies the process. Consolidating your debts into a single loan may let you pay less monthly. Try to keep all your balances low to avoid this higher interest, pay all your bills on time, manage all your credit card accounts responsibly, and avoid opening several new credit card accounts as just a way of trying to increase your available credit.
Pay Off Debt With Debt Settlement
Debt settlement is another option you can consider when you’re ready to eliminate your credit card debt. This strategy usually works best for people who are already past-due on their credit card payments and can afford to make large, one-time settlement payments to their creditors. Debt settlement is a negotiation in which a creditor, like a credit card company or collections agency, agrees to accept a partial payment to satisfy your credit card debt rather than the full balance. You might be eligible if you’ve undergone hardships like job loss, medical problems, or divorce. However, some creditors will consider settling debts even if you don’t have any special extenuating circumstances.
When you settle your debt, you can sometimes pay 60% or less of the original balance. If you're feeling overwhelmed and struggling with debt, feel free to Contact Us for a free consultation today. Our certified debt relief experts at Financial Rescue can help you to get out of debt faster and reduce the overall amount of debt.