There are a few ways to reduce the total amount you owe on your credit cards. Here are three of the most effective. Make extra payments if you can, and transfer your balances to cash-back credit cards. Also, you can transfer the balance to a personal loan to avoid paying interest and fees on both cards. The best way to pay off $2000 in debt is to start paying as soon as possible, preferably as soon as possible.
Making extra payments
While making bi-weekly or monthly payments on credit cards may seem like a daunting task, even one extra payment a year can reduce the total amount you owe by a few months or years. You may even be able to save money for the extra payment by using a windfall. Here are some tips to help you get started. First, know your interest rate. Try to figure out what you can afford to pay each month to reduce your total balance.
Applying the debt snowball method is an effective way to reduce the amount of interest you pay on credit cards. Start by paying off the card with the lowest balance first, then apply any extra money to the next-smallest balance. You can also pay down your credit card debt by making multiple payments, as this will reduce the interest you pay on the cards. By making just $50 each month, you can increase your payment to $100 and then pay the extra money every paycheck.
Transferring debt to a card with a lower interest rate
While you might be tempted to simply transfer your debt to a card with a lower rate, you should make sure you can afford the monthly payments. Credit card companies typically offer a lower interest rate to people who make on time and rarely miss a payment. This way, you can avoid the additional fees and penalties that accrue when you have to pay the full balance.
While you can get a 0% balance transfer offer by transferring your debt, you should also know that this process may negatively impact your credit score. Generally, balance transfers cost three to five percent of the outstanding balance. While this fee may seem small, it can quickly add up and make it harder to pay off your debt in the long run. Fortunately, a lower interest rate on the card you are transferring to will allow you to pay off your debt quickly.
Another advantage of transferring debt to a credit card with a lower interest rate is the amount of money you will save in interest over the life of the new card. You can save nearly two thousand dollars over the life of a balance transfer by switching to a credit card with a lower interest rate. Consider this scenario: you have a balance of $3,000 on a card with a 20 percent interest rate. You would need to pay $1,134 in interest over twenty-four months. If you had chosen a card with a 0% APR and a transfer fee of $90, you would save nearly $1,500 over the course of the new card’s lifetime.
Balance transfers also help you manage your payments. You may have to pay a fee to the issuer, but this is minimal when compared to the benefits of debt consolidation. The process of paying off your debt can also improve your credit score, as reducing the amount you owe will leave you with less debt to pay off. A low interest card with a low APR is ideal for this.
Transferring debt to a cash-back credit card
If you have a large amount of debt, you may be interested in transferring it to a cash-back credit card to help you pay it off faster. By using a cash-back credit card to pay off your debt, you will be able to cut your monthly payments and interest costs. In addition, you can take advantage of 0% APR balance transfer credit cards to get out of debt quickly and easily.
One of the downsides to balance transfers is that most credit cards charge a fee for the transfer, usually 1% to 5% of the balance you transfer. This fee can add $60 to $2000, so be sure to consider the fees before transferring your debt. However, a balance transfer is a great way to pay off debt without incurring too much interest. And most cash-back credit cards offer introductory 0% APR offers, which can help you transfer your debt without paying any interest at all.
While it might be tempting to make a minimum payment, this is not the best way to pay off a debt. Typically, the minimum payment is just 1% or 3% of your balance. Even if you pay more every month, the interest on the debt will pile up and take many years to clear. To avoid paying more than the minimum, contact your bank or credit provider and ask for help. If you are struggling to make even minimum payments, consider contacting a free financial counsellor to find a solution that fits your budget. By taking action now, you’ll be able to prevent small problems from becoming larger ones. You can also plan to reduce your number of credit cards if you have too many.
Transferring debt to a personal loan
If you want to get rid of credit card debt as soon as possible, transfer it to a personal loan. This loan lets you move your debt from one pile to another and may even offer better terms. However, it’s important to note that the interest rate on your personal loan will depend on your credit score. If you have poor credit, your rates will likely be higher than on a personal loan.
Credit card companies don’t always offer 0% APR loans, but some do. By signing up for a 0% APR loan, you’ll avoid paying interest on any debt, even credit card balances. Some card companies also offer 0% introductory periods on purchases and balance transfers, though these offers typically have a high regular interest rate. Before signing up for a 0% APR card, you should check whether it’s worth it.
If you don’t want to incur extra fees, consider investing that money in the stock market. If the interest rate on your personal loan is 5%, this option will make you more money than you would have by paying off the loan early. However, if your personal loan interest rate is 15%, investing in the stock market may not be a good idea. Instead, consider saving up your emergency funds for emergencies, and transferring your debt to a personal loan to pay off $2000 fast is a good option.
If you have credit card debt that you can easily pay off with a personal loan, you may want to consolidate that balance instead. Generally, a personal loan with a lower APR and fixed repayment schedules can be the best choice. Once you have a personal loan, you’ll have a lower interest rate and the peace of mind of knowing that you’ll be paying less each month.