5 ways to pay off credit card debt accumulated during the coronavirus

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The right strategy can make credit debt management easier during the coronavirus pandemic. (iStock)

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The coronavirus pandemic has led more Americans to rely on credit cards to pay bills and cover everyday purchases. For some people who still have financial difficulties related to COVID-19, manage credit card debt has become a major source of stress.

If you’re concerned about keeping track of your credit card debt, these five tips can help.

  1. Consolidate debts with a personal loan
  2. Open a balance transfer card
  3. Follow the guilt snowball method
  4. Follow the debt avalanche method
  5. Use a combination of guilt snowball and avalanche methods

1. Consolidate debt with a personal loan

Using a personal loan paying off high-interest credit cards can save you money and make tracking monthly payments easier.

With interest rates near historic lows, now could be a great time to consider a consolidation loan for managing credit card debt. Visit Credible to compare personal loan interest rates from multiple lenders without affecting your credit score.

DO YOU NEED TO GET A PERSONAL LOAN TO PAY CREDIT CARD DEBT?

β€œA personal loan used to consolidate and eliminate debt can be helpful for some people because the interest rates are generally lower than other debt,” said Sean Fox, president of Freedom Debt Relief in San Mateo, California.

If you want to consolidate your cards with a personal loan, it is useful to have a online loan calculator to estimate your monthly payments.

2. Open a credit card for balance transfer

Balance transfer cards offering a 0% APR can also be a useful way to save money on interest while streamlining monthly credit card payments.

Fox said if you’re considering a balance transfer offer, make sure you can pay off the balance before the promotional rate expires. By comparing balance transfer offers from different credit card companies, you can find a card that offers the best terms. Credible makes it easy to compare balance transfer cards in one place to help you decide which one to apply for.

If you’re interested in other credit card options, Credible has you covered. You can view different card types in one table. Click here to browse credit card options, including balance transfer and zero percent credit cards today.

PERSONAL LOAN VS. 0% APR CREDIT CARD: WHAT IS BETTER FOR DEBT CONSOLIDATION?

3. Follow the guilt snowball method

The debt snowball method advocates paying off credit card debt from lowest to highest. You use as much extra money as possible for the first debt on your list, while making minimal payments for the rest. While paying for the first card, roll the payment to the next card on the list.

This debt service may not save you money in interest if you leave credit cards with the highest APRs to pay off last. But there is an advantage.

“This works well for people who like to pay off a debt β€” even a small one β€” in full,” Fox says. β€œThis often serves as motivation to keep going and pay off the remaining debt.”

4. Follow the debt avalanche method

The debt avalanche method has a different approach to debt repayment. Instead of focusing on balances, rank your debts from the highest APR to the lowest. You then throw as much money as possible to the card with the highest interest, while you pay the rest minimally.

Fox said the avalanche method will get you out of debt faster while saving more money because you make a bigger dent in interest charges. But the downside is that you may not get that first quick profit that you would by paying off a smaller debt using the snowball method.

3 WAYS TO ELIMINATE CREDIT CARD DEBTS

5. Use a combination of guilt snowball and avalanche methods

If you want to combine the best of both worlds when managing credit card debt, you can use the so-called blizzard method instead.

It works like this: you pay off the smallest debt first to get a motivational boost. Then you switch to the avalanche method and focus your efforts on paying off credit cards with the highest interest rates.

DEBT SNOWBALL METHOD VS. DEBT AVALANCHE: WHAT’S THE DIFFERENCE?

Get help managing credit card debt if needed

If you’re having trouble keeping up with your minimum credit card payments, it’s important to stay in touch with your card issuers. You may be eligible for credit card hardship if your finances have suffered as a result of the coronavirus pandemic. Credit card deprivation programs can offer benefits such as reduced interest rates, waived fees, or reduced minimum payments to make managing your debt easier.

You can employ a similar strategy for managing student loans, mortgage payments, and other debts. For example, you may be eligible for deferral or deferral options that allow you to temporarily suspend payments until the economy improves and your finances return to normal.

You can also visit Credible to research and compare loan options for student loan refinancing or mortgage debt.

WHAT TO DO AFTER PAYMENT OF THE CREDIT CARD DEBT?

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