5 Ways to Pay Off High-Rate Debt
07/01/2022 | Archive
Credit cards, store cards, or other lines of credit can be both a valuable tool and a potential problem. Do you have debt that you’re struggling to pay off due to the high interest rate? It may feel overwhelming, but we’re here to help by providing tips and solutions.
- Pay More Than the Minimum
Credit cards usually offer low payments compared to your balance, which can be a beneficial financial tool to have available. However, consistently only paying that low minimum payment can lead to increasingly larger balances over time. Most card companies will allow you to pay more than the minimum or even the entire balance, so check your credit card terms to find out if you can make additional payments toward the principal.
- Make a Payment as Often as Possible
Many employers have payroll set up bi-weekly or semi-monthly. If that’s your pay schedule, pay towards your credit card with each paycheck you receive. Making payments frequently will help tackle the overall balance at a quicker rate than making the once-a-month required payment.
- Choose a Debt Payment Method
Whether you prefer to pay off your biggest debt first or prefer the snowball method of paying the smallest first, setting a goal and making a plan will help you follow through. Many find that seeing progress on their debt helps them stay motivated. Start by deciding if you would rather see small debt tackled first (and even eliminated), then use freed funds as payments towards your bigger debt. Or, if you would rather tackle the largest first, later using the freed payments to pay off the smaller balances.
- Utilize Budgeting Tools
Set a budget that allows for more than the minimum payment on at least one balance. Utilize apps, reminders or take advantage of our Plan & Learn section within Apple FCU Online to help you achieve your goals. While there, you can view your spending habits and set saving goals.
- Consolidate Debt
Sometimes, the best option for paying off high-rate balances is to combine them into one, single payment that you can manage. Many times, this option will reduce the amount you are paying each month and reduce the stress of determining which bills to tackle first. Consider offers such as balance transfers, or personal or home equity lines of credit, to consolidate debt.
While debt can seem daunting, we want you to know we are here each step of the way. Visit our Learning Center to access tools and resources to get you on the path to financial freedom.