How to pay off credit card debt in 2021, step by step

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If you took out credit card debt in 2020 because of COVID-19, you are not alone. Many Americans found themselves working fewer hours or out of work altogether. In some industries, such as restaurants and gyms, a complete closure has been made, leaving the worries of unemployed people. And while the stimulus studies helped, after emergency savings were deployed many had to take out debts to meet heads.

Now that 2021 is off and on, it’s time to make a plan for those debts you’ve accumulated due to COVID-19 pandemics.

Autopsy for previous year’s spending

First, work out where your money was spent in 2020. If you haven’t gone through your expenses since last year, print out your bank and credit card statements and take a good look at your wear.

If your accounts are tied to a budget app like Mint, you should be able to make a quick investment of what you’ve spent on each month. And if you get over this task, just take a closer look at the past few months. You should get a good idea of ​​where your money has gone by analyzing costs even three months.

The pandemic may have made you assess what you wanted against what you needed in 2020. While you may have thought that you would cut back on unnecessary things, a review of your spending may make you realize you weren’t as big as you could have been. Were there regular charges for memberships or other products / services that you do not use or need? Turn off or reduce anything that is not necessary to save money.

Come up with a plan

If you know you were taking out some debt in 2020 but are afraid to take a closer look, now is the time to dig in. Go through your credit cards and any other personal loans you could use in 2020 and write down the balance and interest rate for each. This will help you design a plan for how you can afford it.

Many prefer the Snowball Mode, in which you pay off the smallest debt first and then move that payment to the next one as you work your way up to the highest debt, but Avalanche Mode will save you interest in the long run.

Mason Miranda, a Credit Industry Specialist at Credit Card Insider, sums it up as follows: “This (avalanche mode) has focused on debt with the highest interest rates first. As soon as the first one is pay it off, you will have to raise more money for the next one, burying all your debts under an avalanche as you free up more and more money. “

Budget in your debt repayment

While the strategy you choose to pay off your debts is important, and it is even more important to determine where the money will come from. If you haven’t already created a budget, now is the time.

This is as follows:

If you come up with a negative amount, it’s time to cut out or reduce some expenses or take a side to increase your income. You will not be able to put money regularly into your debt if you have to continue using these credit cards to pay for your life.

Keep track of your progress

Getting out of debt may take you longer than it took to get into debt, so it’s easy to become discouraged. Monitoring your progress monthly, or even weekly, is a surefire way to keep up with the trend. Praise the level of progress you make with each payment, and stay focused on the end result of debt freedom.

Use crutch (if needed)

If the COVID-19 pandemic is still affecting your job status and you are unable to stick to a debt repayment plan, it may be time to consider other options.

Consolidating your debt on a balance transfer credit card or personal loan can give you some breathing space if you are still struggling financially. This allows you to have all your debt in one place with a lower interest rate and one monthly payment for tracking.

While there are a lot of balance transfer cards out there, Meghan Gound, Vice President of Credit Cards at the Federal Credit Union of the Navy, says the best balance transfer cards feature “no taxes, zero interest per first during the start – up period, and low after the end of the intro period. “

If you are struggling with making payments on time or making the minimum payment, you can contact your credit card provider to see if you can work out an agreement. gives you flexibility about payments or saves you interest in the long run. Matt Schulz, LendingTree ‘s Chief Credit Analyst, agrees: “If you’re struggling with debt, consider contacting your cardholder and requesting a lower interest rate. The chances of success are slim. higher than you think. “

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