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The COVID-19 pandemic has had an unprecedented financial effect on a scale not witnessed for a long time. Millions have lost their jobs or had to endure pay cuts. An estimated 87 million Americans are in financial distress with fears that their credit score will be affected, dragging down their chances of cheaper credit and lower insurance premiums.
Already, many Americans have slipped into credit card debt because of the pandemic. Here are seven things you can do right now to get back on track.
The initial step to take is to approach your card company to discuss your financial situation. A candid talk with the credit manager will explore the possible options available to you. Most importantly, it will indicate that you are concerned about the debt pile-up and your commitment to clear the jam.
Multiple credit card debts can be overwhelming as due dates fall randomly within the month. How about you consider transferring all your debts to a single location? Look around for the most affordable balance transfer card. You will not only bring down the interest paid, but you will also enjoy the peace of mind managing a single account.
This method entails starting the clear out with the card charging the highest interest rates first and climbing down to the card with the least interest rate. In turn, you save some dollars on the interest paid and free up your income for tackling the rest of the debts down the avalanche.
If you have several credit card debts, dedicate yourself to first clearing one debt at a time, starting with the smallest debt and paying the bare minimum on the other debts. Servicing two or more credit cards simultaneously will drag on for longer, leading to higher interest paid on all the cards.
A few dollars above the minimum amount payable is a smart way of dealing with credit card debt. You will achieve a double milestone; you will pay lesser interest and shorten the debt tenure. Then improving your credit score to get back into the good books of lenders.
Peruse credit card statements to check whether there are any errors, and prompt correction of the statement mistakes has an impact on the amount of interest paid. Also, credit card fraud is a common phenomenon. Tracking your bills periodically helps identify fraudulent transactions.
Take advantage of the credit-free period by mastering the first day of the billing cycle. If the cycle starts on the 5th of every month, purchases made on the 4th only grant one day window of interest-free credit. So a purchase made on the 6th will allow more days to enjoy interest-free credit.
Overdue credit card debts can be a constant stressor, especially during these challenging times precipitated by the coronavirus pandemic. Knowing how to pay off the accumulated debts is an essential step in regaining peace of mind. A combination of the above ways is a good way to start off the process.
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