Hoboken, New Jersey, Dec. 29. 2020 (GLOBE NEWSWIRE) — According to a new study by ReadyEDUa personal finance company based in Hoboken, New Jersey, 63% of Americans have taken on a record amount of credit card debt due to both holiday shopping and the pandemic recession.
This includes 75% of Americans who have lost their jobs due to the coronavirus pandemic and are still unemployed. The study of ReadyEDU also found that 55% of consumers are losing sleep over the amount of credit card debt they have accumulated due to holiday shopping coinciding with an economic crisis. For reference, LendEDU found that the 2020 holiday shopping combined with the pandemic recession led to an average credit card debt balance of $2,150.
The full LendEDU study can be found here.
So how can a consumer go about paying off their credit card debt starting holiday 2020?
ReadyEDU explains some strategies below.
Balance transfer credit card
A credit card balance transfer can be a great way to pay off credit card debt, as this method will transfer all of your credit card debt to a new balance transfer card that ideally has an introductory APR of 0% for at least three months. If you transfer your credit card debt to a balance transfer card with an initial APR of 0%, no interest will be charged on your debt balance, meaning 100% of your monthly payments can be used to pay off the main balance. If you decide to employ this strategy, it’s important to find a balance transfer card with an introductory APR of 0% for at least 3-6 months, while being aggressive with your monthly payments during the introduction. By doing both, you can take full advantage of using a balance transfer credit card to effectively pay off credit card debt.
debt consolidation loan
A debt consolidation loan could also work as a credit card debt repayment strategy if your vacation credit card debt is spread across multiple credit cards that have high interest rates. A debt consolidation loan, which usually comes from a personal lender, will consolidate your various debts into a single personal loan that can facilitate repayment. Possible benefits include only having to make one monthly payment for the debt consolidation loan instead of multiple payments for multiple credit cards, plus possibly getting a lower interest rate, which could save money. Additionally, a debt consolidation loan can extend your repayment period, which could reduce monthly payments.
Debt Avalanche Method
Another credit card debt repayment strategy is not an actual product like the first two, but rather an actual method to hopefully pay off debt faster. the debt avalanche method is to use all of your extra funds to first pay off the credit card debt balance on the credit card with the highest interest rate. Once the debt balance is paid in full, you then switch to the credit card with the next highest interest rate. By paying off debt on the highest credit cards first, the debt avalanche method gets rid of the most expensive debt up front, which should save you the most money down the road. long term.
Credit card debt is not only a financial burden, but also a mental one, according to the ReadyEDU report. Due to its significant negative impact, credit card debt needs to be paid off as quickly as possible to get back on track to financial freedom. The only way to effectively pay off credit card debt is to understand both your debt and your repayment options, as this knowledge will give you the best chance of finding the best repayment strategy for your specific needs.
To learn more about debt repayment and your options, visit ReadyEDU.
