How To Pay Off $10000 Of Credit Card Debt
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You may be wondering how to pay off $10,000 of credit card debt. If you have credit card debt, it may be overwhelming and take years to pay off. The good news is that there are several strategies that you can use to pay off $10,000 of credit card debt.
Heres what you need to know.
What Is A Credit Card Consolidation Loan
With a , you can consolidate multiple credit cards with a high interest rate into a new, single credit card consolidation loan with a lower, fixed interest rate. A credit card consolidation loan is a type of personal loan that you can use to consolidate credit card debt.
With a fixed interest rate, this means that your interest will never change while you pay off credit card debt. This makes your credit card payments more predictable.
also provide credit card debt repayment flexibility. You could choose a shorter credit card repayment term to save more money on interest. However, your monthly payments may be higher. Conversely, you could choose a longer repayment period, which means you could have a lower monthly repayment. However, you may pay more in interest on your personal loan.
Compare the latest rates for a credit card consolidation loan.
How To Pay Off Credit Cards With A Personal Loan
It’s relatively simple to consolidate credit card debt into a personal loan. The application process can be done completely online, so you can start saving money without leaving the comfort of your home. Here’s what you’ll need to do:
- Determine how much you need to borrow. You can consolidate the balances of one or more credit cards into a personal loan, so add up the total debt across all the accounts you want to repay.
- Check your credit score. Borrowers with very good to excellent credit scores, defined by the FICO model as 740 or above, will receive the lowest rates possible on a personal loan.
- Compare personal loan rates. Most lenders let you get prequalified to see your estimated terms with a soft credit check, which won’t affect your credit score.
- Formally apply for the loan. This will require a hard credit inquiry, which will show up on your credit report with a minimalimpact to your score.
- Pay off your credit cards. Personal loan funding is fast, typically available on the next business day after loan approval. Use your loan funds to pay off your credit card balances to zero.
If you decide to consolidate credit card debt with a personal loan, it’s important to spend wisely to avoid racking up more credit card debt while you repay your current debt.
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Tap Into Your Homes Equity
Best if: You own a home with at least 15% to 20% equity.
If youre a homeowner, you might be able to tap into your homes equity with a home equity loan or home equity line of credit and use the funds to consolidate your credit card debt.
With a home equity loan, youll get a lump sum that you can use how you wish.With a HELOC, youll have access to a revolving credit line that you can repeatedly draw on and pay off.
Because these loans are secured by your home, they often come with lower interest rates compared to credit cards or personal loans.
However, keep in mind that if you cant keep up with your payments, you risk losing your house.
Lower interest rates: Because theres less risk to the lender, home equity loans and HELOCs tend to have lower interest rates than credit cards or personal loans.Long repayment term: You could have five to 30 years to repay a home equity loan or up to 20 years to pay off a HELOC.Can use funds for any purpose: You can use the funds from a home equity loan or HELOC for almost any purpose. This could be helpful if you have other expenses to cover in addition to your credit card debt.
Check Out: Home Equity Loan vs. Personal Loan: Which Is Right for You?
Balance Transfer Credit Card
A balance transfer can help expedite paying off your debt by offering a promotional introductory 0% APR for a set amount of time, typically between six months to nearly two years. The way it works is you can transfer your high-interest debt to this card and continue making monthly payments. Since all of your payments will go solely towards the principal during the length of the offer, youll make faster headway than if you had to pay interest and principal.
One caveat is that these cards usually require a high credit score. If your credit isnt great it might not be an available option. Also be aware that most balance transfer cards charge a balance transfer fee, which is typically between 3% to 5% of the amount being transferred and can add to your existing debt load.
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Work With Your Credit Card Company
In some cases, you might be able to work out an arrangement with your credit card company that could help you tackle your debt. Here are a few options to consider:
sk your credit card company about a hardship plan
Best if: Your account is in good standing.
If your credit card payments are becoming too difficult to manage, its a good idea to call your card company to see if any assistance is available to you.
For example, several credit card companies offer hardship plans, which often provide a lower interest rate, reduced monthly payments, and lower fees.
Generally, credit card companies prefer to work with long-time customers who havent missed any payments. If you think you might not be able to make a payment, be sure to reach out to your card issuer as soon as possible.
Could lower your interest rate: A hardship plan could temporarily provide more optimal terms, such as a lower interest rate.Fixed repayment: Hardship plans usually come with fixed repayment schedules, which could make it easier to budget for your payments.Maintain good standing: If you reach out to your credit card company before you miss any payments, youll have a better chance of keeping your account in good standing with the company.
Learn More: Coronavirus Hardship Loans: 7 Options to Consider
How Long Will It Take To Pay Off Your Credit Card Debt
Ever feel like debt freedom is an impossible dream, something beyond reach?
Paying off your credit card can be a painful subject. But it doesn’t have to be that way.
Imagine if you could pay off your debt quickly. How much more money would you have for vacations, your children’s education, or retirement goals?
Thankfully, our Credit Card Payoff Calculator helps you easily figure when you’ll be able to pay off your debt. Try entering various payment plans and prove to yourself how much time and money you can save!
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How To Pay Off $10000 In Credit Card Debt In Two Years: My Story
Wondering how to pay off $10,000 In credit card debt? After years in a vicious cycle of debt, Jerry Coffey did exactly that through deliberate planning and careful money management. Now he blogs over at Repaid.org Heres his story.
Getting out of debt is possible, not by skipping your daily trip to Starbucks, but through hard work and planning. Here is how I eliminated $10,000 in credit card debt in just 27 months.
Stop Using Your Credit Cards
If youre finally ready to end that toxic relationship in your life , youve got to kick them to the curb. Yep, break up with them and never look back. They werent your type . Just put them on the table and say, Its not meits you . . . Youre bad for me, my finances and my future. Goodbye. Then take those kitchen scissors and cut them up so you wont be tempted to swipe them again.
Listen: If you stop using credit cards and finally pay them off, youll never have to worry about your credit card balance. Ever. Again. What does this mean? It means you get to start paying for things with your own hard-earned money in the form of cold hard cash .
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First Choose Which Debt To Pay Off First
If you have multiple credit cards, loans or other debts, its important to look at a few factors when deciding which to pay off first. To save the most money in the long run, pay down the debt with the highest interest rate, or pay the debt that is closest to your credit max. Both of these options will help raise your credit score in addition to relieving some of your debt. If youre interested in learning more, check out our advice on Keeping Score.
How Credit Card Debt Spirals Out Of Control
Its easy to let credit card debt spiral out of control, eventually getting so big that it feels impossible to repay.
Heres an example that illustrates the point:
Lets say youre putting $250 per month toward paying down $10,000 in credit card debt, and your credit card has 18% interest.
After a year, the monthly payments you made would add up to $3,000.
But with 18% interest, it might shock you to learn that $1,800 of the money you put toward paying down your credit card debt actually went toward paying the interest, not the principal.
That means $1,800 of your hard-earned money went straight into the credit card companies pockets!
Meanwhile, only $1,200 was actually applied toward paying down your $10,000 principal balance. At this rate, youll not only pay an additional $5,386 in interest, but it will also take you 62 months to pay off.
62 months is the equivalent of 5.17 years!
It doesnt have to be this way. You can get out of debt.
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Balance Transfer Cards: One Way To Help Pay Off Debt
Rather than pay interest on your credit card debt, you may be able to transfer high-interest debt to a single credit card with a balance transfer.
A number of balance transfer cards allow you to pay an introductory interest rate of 0% on your balance for a set amount of time, so you can pay more money toward your principal and reduce how long it will take to pay off your debt.
Learn how to do a balance transfer in six steps.
Whats The Trick To Paying Off A Credit Card Quickly
Earlier, we talked about the best way to pay off that credit card debt: the debt snowball method. Heres how it works.
Step 1: List your credit card balances from smallest to largest. Pay minimum payments on everything but the smallest one.
Step 2: Use all the extra money youve got from those earlier tips and attack the smallest credit card debt with a vengeance. Once that debt is gone, take what you were paying on it and apply it to the second-smallest debt .
Step 3: Repeat Steps 1 and 2 until your debt is completely gone! The more you pay off, the more money you have to throw at the next debtlike a snowball rolling downhill. Its unstoppable. Youre unstoppable. That credit card debt doesnt stand a chance.
Pro tip: Dont forget to close your credit card accounts after you pay them off. Then you can start dancing like nobodys watching. You did it!
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Shorten The Length Of Your Loan
Refinancing your debt to a shorter term may help you pay it off faster and save on the total cost of borrowing. You may be able to qualify for a lower rate, or a shorter or longer loan term, depending on your situation. Remember, shortening the term of your loan could increase your monthly payments.
Use A Credit Card Payoff Calculator
I recently created a new calculator that will tell you how long it will take you to pay off your credit card debt! Check out my to find out how much work you have to do.
Thats it pretty simple, right? Easier said than done I know. This debt problem isnt so much a debt problem as it is a lifestyle problem. We have debt because we buy things we dont need. Changing our thought processes and lifestyles will relieve our financial stress. The majority of the time, we just need a plan for our money. That is where the budget comes into play. Give yourself a path to follow and stick to it.
I am proud of you my friends. Your continued financial education will lead you to financial freedom. Its amazing to see people changing all around me. Take control of your money and you can take control of your life! If you havent already, please subscribe to my blog via email below. Thanks for reading, and as always, you work too hard to be this broke!-Ryan
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Debt Settlements: Why You Should Avoid Them
For-profit debt settlement or consolidation services claim to settle your debt for less money. However, these services typically charge hundreds to thousands of dollars in upfront fees and thousands in servicing fees. To get your creditors to negotiate, these companies generally encourage you to stop making payments so your accounts go to collections. But this and any account reported as settled damages your credit score. Some creditors refuse to work with some debt settlement companies, so many of your debts remain outstanding. You may owe penalties and late fees on those that went into collections. The success rate for debt settlement is abysmal as well.
Open A 0% Balance Transfer Credit Card
The double-digit interest rates that most credit cards charge can make paying off debt feel like you are running in place. If your debt increases by 18% or 20% per year, the amount of your minimum payment will barely cover the amount of interest youre charged. To help prevent that, see if you can open a 0% APY credit card and transfer your balances. Although theres usually a fee of 3% or so, its far less than the cost of interest on your other cards over the course of a year. This will buy you some time to make additional payments and reduce your debt without interest fighting against you.
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Pay As Much As You Can Each Month
If you can make higher repayments each month, you will pay off the debt faster and save money.
Work out the fastest way to pay off your credit card.
If you only pay the minimum, you’ll pay a lot of interest and it will take years to pay off your debt in full.
If you’re finding it hard to pay the minimum amount, contact your bank or credit provider straight away or talk to a free financial counsellor. Taking action early stops a small money problem from getting bigger.
Benefits Of Using A Personal Loan
A major benefit of using a personal loan to pay off your credit card debt is that it will happen quicker than paying the minimum payment on your cards each month. Depending on a variety of factors, you could spend more than 20 years paying off your credit card if youre only paying the minimum payment thats a tough number to accept.
With a personal loan, youd typically repay the loan in 3-5 years. The monthly payment may be higher than your credit card payment was, but if you can afford it, its worth it to erase that debt sooner rather than later.
Note: There are also companies like Tally that specialize in helping people manage their credit card debt. Tally not only offers a low-interest line of credit where you can consolidate your debt, but they also help simplify and prioritize your monthly payments. With Tally, you make one monthly payment to them and then they handle all your monthly credit card payments.
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She Negotiated With Every Creditor
Khalfani-Cox knew that with each day that passed, interest accrued on her already high credit card balances. She decided to call her creditors and negotiate lower interest rates.
“I got all my credit cards down to either 0%, 2.9% or 4.9%,” she says. This helped to significantly lower her payments, given that credit cards charge notoriously high, double-digit interest that can easily cause cardholders’ debt to balloon.
To free up even more money to pay down her credit card debt, Khalfani-Cox looked at ways to lower the monthly payments on her other types of debt, including refinancing the interest rate on her auto loan.
Hardship Credit Card Payment Plan: Advantages
There are several advantages to a hardship credit card payment plan:
- Fixed repayment: Like a personal loan, a hardship credit card payment plan typically offers a fixed interest rate, which makes credit card payments more predictable.
- Advance notice: Remember to contact your credit card company in advance so you can communicate you might not be able to make your next credit card payment. This will help you save fees and maintain your credit card payment history.
- Better terms: You may be able to negotiate better terms with your credit card company, such as a lower interest rate.
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