Paying off high interest debt, like a credit card debt, can be difficult, especially if you are on a low income. Here are some ways to pay off your high interest debts faster.
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1. Stop Adding to your Debt
When you are dealing with a high interest debt, the first and most important thing you don’t want to do is to add to that debt.
Because the more you are adding to it, the more debt you are accumulating and the harder it is for you to pay it off faster. So, if you have a high interest credit card debt, put that credit card away and don’t touch until it’s all paid off.
2. Make More than the Minimum Payment
The second most important thing to do when you are dealing with high interest debt is to pay more than the minimum monthly payments. If you only make the minimum monthly payment, only a small portion goes to the debt. Most of the payment goes to the interest.
If you make more than the minimum payment, even if a small amount, it will reduce not only the time it will take you to pay off the debt, but it will also reduce the total amount you will pay.
3. Borrow from Your Savings Account
The third most important thing to do when you are dealing with high interest debt is to get some money from your savings account and use it toward your high interest debt. It’s always a good idea to have an online high interest savings account.
First, because the money there is safe and you get compound interest on your savings every month or every quarter even though the interest is around 0.90% and 1 %.
But what good does that do to us if we are dealing with a 13 to 22% high interest debt when we have money sitting in a savings account paying a 1% interest. So some of that money should be use toward your high interest debt.
4. Pay your Debt on Time
The fourth most important thing to do when you are dealing with high interest debt is to pay it on time.
Paying off your debt on time help reduce fees. Late fees add up to your balance and can cause higher interest rates on future balances. To avoid this, make your payment on time every month.
5. Negotiate the Interest Rate with your Creditor
Another important thing to do when you are dealing with high interest debt is to negotiate the interest rate with your creditor.
If you pay your monthly payment on time and have a good credit score, the creditors can lower your interest rate. So call them and negotiate the interest rate.