According to The Balance, credit cards get to be a bad thing when they are near your credit limit. They also can be very bad when you have a few that are getting to the point where you are struggling to make the payments. When the balances are high, they send your credit score plummeting. Also, Nerdwallet reported that the average credit card interest rate as of 2019 is over 17 percent. With rates so high, it becomes very difficult to pay the cards down.

Here at Punch Associates, a firm that offers solutions to borrowers in heavy debt, we often field questions from clients on how to pay down credit card debt. The following are some guidelines.

Assess Your Budget

According to Nerdwallet, the first step in getting your finances back on track is to make a budget. You need to find out how much you owe on each credit card as well as your monthly minimum payments on each, your other monthly expenses and your yearly expenses. You will need to figure out how much you need to pay for everything each month and how much is left.

Eliminate Some Expenses

Money Magazine suggests that if you find that you just don’t have enough money each month to put towards serious debt pay down, then you will need to find expenses that you really can do without for a while. Sometimes, we find in our debt pay down process that a monthly expense we did not think we could live without was easy to go without. Some really unnecessary expenses, if you are struggling financially, are cable television, other video subscription services, dinner at restaurants and Starbucks. After eliminating extraneous expenses, see how much you can put towards debt pay off each month.

Add Some Income

Side gigs can add some income to help you pay down your debt. There are certainly more options out there today. A tip is to avoid the Ubers and the gigs that only pay in work per job. You often will end up earning less than minimum wage and owe double the taxes in self-employment tax.

Put the Plastic Away

In order to pay the cards down, it is best to leave them in a drawer at home.

Pay Down Order

Money Magazine suggests that you pay down the highest interest cards first. That will eliminate more of the interest you are paying sooner. The interest alone is likely dragging down your finances. With each card paid down, more money is freed towards paying off the rest.

The other bit of good news, according to USA Today, is that you will lower your debt utilization score when you pay off a card and don’t cancel it. That, in turn, will improve your credit score.

If all of the above still leaves you unable to pay off the cards quickly, you need to lower your interest rates. This can be done in one of two ways:

Zero-percent interest credit card: If you have good enough credit and you can pay the debt off in the term of the introductory interest rate, you can get a zero-percent interest rate, balance transfer credit card. The introductory period usually is 12 to 18 months. The money you were paying in interest on the other cards can go directly to pay off more of the balance.

Debt consolidation loan: According to Forbes Magazine, a debt consolidation loan is usually for a term of three to seven years. This type of personal loan will pay off your credit cards, improving your credit score. The interest rate is usually smaller than the interest rates for your credit cards. This loan will allow you to pay off the debt quickly, due to the lower interest rate.

At Punch Associates, we are here to help with your debt issues. Contact us before the problem gets deeper. We have solutions