How to Speed Up Your Debt Repayment
Dealing with debt means operating on both the defensive and the offensive: When your goal is to cut down on debt, the keys are to stop borrowing more money, make sure you can afford your payments and try lowering your interest rates as much as you can.
Here are six tips to keep your debt under control and speed up the process of paying back your debt.
1. Stay on top of your credit
Everyone who borrows money should keep an eye on their credit score. If you have loans and several accounts to deal with, you’ll need to know how your debt affects your credit rating. With better credit, you can be eligible for less expensive loans or potentially have some leeway to reduce your interest rates. If you want to pay off your loans as quickly as possible, a healthy credit history may give you even more options as we’ll discuss below.
2. Consider consolidating your loans
You may want to consider consolidating your loans as a way of reducing your debt. While your actual rates and offers will vary, consolidating your loans to another type of credit with a lower interest rate can help apply your payments toward the principle balance rather than a portion going to the debt’s interest.
Keep in mind that debt consolidation loans and credit cards may have a temporary introductory rate that’s lower than the standard interest rate, so it’s important to check all the fine print before you commit to any type of loan. You may also be able to save money by paying off your debt completely before the introductory rate ends and the standard interest rate begins.
3. Look to lower your interest rates
Find out if there is any way to reduce your loan rates. Can you qualify for low-interest credit cards? Would debt consolidation help you save money? A good credit history can make it easier to find alternative solutions, make a more favorable agreement and save money on interest.
A wide variety of financial institutions offer hardship and deferment programs to help you manage difficult situations, while some banks are willing to negotiate with borrowers who approach them for guidance. It doesn’t hurt to try!
4. Do your own debt management
Before you spend even more money for credit counseling or turn to debt settlement companies, do all you can to take care of debt issues on your own. Handling things yourself is much cheaper.
A lot of debt management comes down to fiscal discipline: Start off by avoiding new debt by only using cash or your debit card rather than your credit card. Try to save money to help cover financial emergencies. Cut back on spending and try to earn more with a side gig or additional income source to help cover your bills. There’s nothing others can help you with that you can’t already do on your own.
5. Pay your bills on time!
You know you’re in trouble if you’re unable to make regular payments on time: Let this be an indication that you should make it a priority to address your debt. Do your best to cut down on expenses while paying on time. Paying your bills late will only cause your rates to go up and worsen the situation.
While it won’t help you eliminate debt faster, it’s worth noting that some banks and financial institutions offer hardship and deferment programs to help you manage difficult decisions and keep your credit in good standing. If you’re truly in danger of falling behind on bills, contact your lenders for more information.
6. Pay more than the minimum each month
Paying just the minimum amount each month may barely make a difference in your balance and cause you to remain in debt even longer. If you ever find yourself with extra income, you should think about applying it towards your debt. If the debt is causing you to struggle, you want to get rid of it A.S.A.P.