(Newswire.net — December 19, 2018) — In case you are a mom dealing with higher credit card debt then remember you are not just one. According to the statistics and results available from Federal Reserve, consumer credit debt in the USA has just topped the mark of $3.34 trillion dollars as to February 2015. It means that it is slightly over $11K dollars of debt for the person in the said country.
With such numbers, it is not any kind of wonder that many people are struggling with the credit card debt, mainly when they are considering that the average cardholder will have around $15K in credit card based debt. It will have one average form of the annual percentage rate of around 17%. Keeping this point in mind, it will make a lot of sense to focus on the strategies for getting the debt rightfully paid off quickly. You will get some more options in hand and some valid information from Nationaldebtrelief.com.
Paying minimum can always double the debt that you are already in for.
You have to answer this question quite honestly. Are you paying extra on your credit card bills or are you planning to stick to minimum payments on a monthly scale? In case you are like most of the people over here, it is probably going to be the minimum. Even though making minimum payments can help you keep the credit score from just dropping down, doing so costs you more in the said long run. In case, you are just making minimum payments, the time it takes to pay off bill increases at an exponential rate.
For example, in case the credit card debt you are in is $15K, the interest rate is likely to be around 17%. Then you have to make the minimum payment of somewhat around $250 per month. It can further take 135 months for paying that card or which is little more than 11 years. At this time, you might end up paying more than $18K on interest, over this $15K principal. So, now you know why paying such cards sooner than later can make a lot of sense.
Paying little extra off on a monthly basis:
The straightforward and most selected method over here to get out of debt is by simply paying more than minimum due, on a monthly scale. This method is proven to be a great option for the mothers when they have the single consolidated debt to deal with.
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Paying extra is the proficient way as it helps in keeping up with the credit rating as credit reporting agencies might look at things like over-payment and early payment to be good indicators of the creditworthiness.
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It can further shorten the timeline quite dramatically for paying off debt as the extra payment goes quite straight to the principal. To help you get to the answer right now, let’s walk towards the example. Sticking with that previous example of $15K in credit card based debt, with an annual interest rate of 17%, if you end up paying $250 minimum; you can pay the loan a little over 11 years. You can end up paying $18K just on an interest rate.
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But, on the other hand, if you pay around $400 per month just on the same card, it will just take you 54 months to cover the debt. To top it all, you will only spend $6545 in the interest, when compared to the $18K mark as mentioned previously.
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Now, it is actually granted that the extra $150 per month is not a minimal amount, especially for single mothers working for their kids and to run a family well.but, if you can actually find a way to do so like freelancing or side business or even a second job, then it will not just cut the time for repaying credit by more than half, but can reduce interest portion by 2/3. It might result in a total repayment of just $22K in place of $34K. It means you get to save $12K easily and neatly.
By the law, minimum credit card payments are primarily defined as month’s portion of the annual interest laid due, along with 1% of principal. Out of your entire monthly minimalized payment, just 1% goes to principal. In case you pay extra, all that money goes to the principal.
You can divide and then conquer as well.
In case you are like most of the other mothers, then you might have more than one card on your shoulder to think about when it comes to repayment time. On average, Americans will hold 3.7 credit cards for their use, which is a bit weird and absurd, to be honest. These cards will mainly have various interest rates and some of the balances as well.
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If you have various credit cards and each with a different interest rate and balance, then watch out for the steps. For paying the options, you have to pay the minimum amount on each one. But, this step can actually prolong the repayment plan and increase the total bill with time.
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Another proven strategy over here is to just end up paying more than minimum on every card possible. It is a good strategy and can decrease time to pay the debt off dramatically and even the payoff amount.
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A better strategy over here is just to focus on extra payments on a card with highest forms of interest rates. This strategy helps in either paying a minimum on 3 to 4 cards or pay substantially more on a card with the highest forms of interest rates. It provides you with a double benefit of reducing timelines and interest. Once the cards are paid off, you can take money to apply on the next card on time.
It is really important for you to learn more about the options available and work out accordingly. The more you check for the options, the better ones are waiting for you now.