Having a lot of debt can be an incredible burden. Not only does debt tend to increase as a result of high interest rates, but it can affect your credit score -- not to mention your financial flexibility. If you're looking to buy a new car or a new home, then you'll need to pay down some of your debt so that you can not only qualify for a loan, but so that you aren't burdened with high interest rates as a result of a low credit score. With that in mind, the following are a few tips on how you can pay off debts quickly:
1. Pay Down High-Interest Debts First
Take a look at the different debts that you have and identify what the interest rates are. If there's a debt that has a particularly high interest rate, then you should focus on paying this debt off first. Keep making the minimum payments on all of your other debts, but put any extra money you can use to pay down your debts towards your high-interest debt. This will help prevent the high interest on this debt to accrue. By targeting debt with a high interest rate first, you'll pay less in interest over the long term and pay off your debt faster as well. More often than not, its credit card debt that tends to have the highest interest rates.
2. Pay Off the Smallest Balance First
If you have several debts that have the same interest rate, then consider paying off the debt that has the smallest balance. This will allow you to pay off one of your debts completely as quickly as possible, which can provide you with the motivation you need to tackle the rest of your debt. Just make sure that you continue making the minimum payments on all of your other debts at the same time.
3. Use a Balance Transfer
If you have credit card debt, then you might be able to save some money on interest by performing a balance transfer. You can do this if one credit card with a low balance has a special zero-fee transfer, zero percent interest rate offer. This kind of offer is often provided to entice people to apply for new credit cards as well. If you have a card with a high balance and a high interest rate, you could transfer this balance to a zero percent interest card. This will make it easier to pay down since the debt will no longer be accruing interest.
While a balance transfer can be very helpful when it comes to paying off a credit card, there are a few things to be careful of. First of all, don't use the credit card that you just transferred your balance from or else you'll end up just building your debt back up. Secondly, zero percent interest rate offers only last so long, so be sure to pay it down as quickly as you can before the new interest rate kicks in.
Learning how to manage your debt is easy if you have the right tools. We know you work hard, and with the right debt solution plan your money can work hard for you, too. We can help. Contact us to learn more about our proven and predictable debt solutions. To speak with an expert one-on-one on how you can pay off your debt more quickly, schedule a free consultation with Safe Money Partners today.