If you feel financially stressed because you’re carrying a significant amount of credit card debt, you’re not alone. Carrying around excess debt may put you in the company of millions, but everyday people can breathe a little easier after using a credit card payoff calculator to reverse the trend.
What is a Credit Card Payoff Calculator?
A credit card payoff calculator proves an invaluable tool that provides consumers with hard financial numbers and a pathway back to a manageable budget. Users type in the fields that correspond to their credit card statement and the minimum monthly payment. This field can be adjusted to reduce the number of months it would require to achieve a zero balance on the account.
Savvy calculator users often get creative with the numbers they input in an effort to speed their debt reduction. While there are no gimmicks to make the debt go away, there are several strategies that simplify and streamline the process
How to Pay Off Credit Card Debt
Financial planning experts typically support two strategies for paying down debt across multiple cards. The first is called the “Debt Snowball Method,” and the second is commonly known as the “Debt Avalanche Method.” Both are designed to help overwhelmed consumers alleviate excess debt and reduce high credit utilization (almost fulfilling the allowable money available), which lowers credit scores.
Debt Snowball Method: This technique involves making minimum payments on all your credit card accounts except one. Take as much money as you can reasonably spare and focus it on the account with the lowest balance. The credit card payoff calculator may prove inspirational as the number of months to zero shrinks. Once that card has been washed clean of debt, tuck it away in a drawer and don’t use it. Then target the new lowest balance and continue to repeat the cycle.
- Debt Avalanche Method: This strategy mirrors the snowball approach with one difference. Rather than go after low balances, accounts charging the highest interest are targeted first. Accounts may get zeroed out more slowly, but everyday people usually save money on interest payments. The credit card payoff calculator demonstrates how much money people save using this approach.
Consider running the numbers through the credit card payoff calculator and decide which of the methods suits your financial situation and repayment habits. Another practice community members find successful involves credit card consolidation. In many ways, it delivers the best of both strategies' benefits.
Reveal the forgotten perks that only the best credit cards offer, by downloading our free guide:
The Best Credit Cards Always Offer These Hidden Benefits
What Is Credit Card Consolidation?
Employing a debt consolidation strategy generally involves bringing wide-reaching debt into one account that allows people to make one simple monthly payment. People with high-interest credit cards can apply for a low-rate VISA® and transfer balances into this lower-rate account. This provides immediate interest payment relief and allows cardholders to pay off balances at an accelerated pace.
Low-rate VISA® credit card users can transfer part or all of their outstanding credit card debt and focus on just one balance. It’s also not uncommon to pay off other higher interest rate debt and save money through consolidation. Some examples of other higher interest rate debt may include personal loans, auto loans, or other credit cards that were secured for specific purposes or purchases. Although this debt-elimination technique may seem more complicated than the other methods, it can deliver the following enhanced benefits:
- Interest Rate Reduction: Consolidation offers increased savings when balances are transferred from higher interest cards to one low-rate credit card.
- Financial Flexibility: Replacing multiple minimum monthly payments with a single installment can free up money to spend on leisure activities or to add to a savings account. The long-term goal of people engaged in credit card debt reduction is usually improved financial flexibility and the quality-of-life benefits that come with it.
- Stress Reduction: Knowing you have to only make one payment each month relieves much of the anxiety surrounding debt. Working families who employ consolidation may not need to work long hours just to pay their bills.
If you are considering consolidating more than one credit card, consider entering your existing outstanding debt balances into the personal debt consolidation calculator. This calculator allows you to enter all your outstanding credit card debt and loans into one calculator to view your potential savings if you were to consolidate your debt into a low interest VISA® credit card or personal loan.