Credit Card Debt
If you have ever been late on a credit card payment, you can expect your interest rates to rise to an interest rate as high as 32%! With interest rates this high, it can be difficult to satisfy anything more than the monthly minimum. Therefore, it is important that you pay your credit card obligations on time every month to avoid having to unnecessarily pay more.
But, if it’s too late and your already in a situation of paying ridiculous interest rates then you will need to develop a plan. The most sensible thing to do is to get rid of the credit card with the highest interest rate first. Pay the minimums on all the other cards while contributing as much as you can towards the highest interest card. Then, once the highest interest card is paid off, start battling the next highest interest card. Although this approach may take a year or two or more to resolve your debt, you need to start somewhere.
Another option for getting rid of high interest credit card debt is to utilize cards offering 0% balance transfers or low intro APRs. However, when going the route of balance transfers, make sure you read the new card’s fine print so you understand the costs involved for the transfer. Typically, the average fee of a balance transfer is 3-4% of the amount being transferred.
Ideally you should attempt to pay your balance off before the introductory rate expires. However, if you are unable to, it is important to understand what the interest rate is going to be once the intro period expires. You don’t want to be in a situation close to or worse than you are currently in.