Why does credit card debt keep growing? Get rid of it quickly with these 7 methods..

Using a credit card is convenient, but paying only the minimum amount each month can trap you in debt for the long haul. Interest continues to accrue on the outstanding balance, significantly slowing down the pace of debt repayment. According to a survey, 41% of credit cardholders in the US pay only the minimum amount on at least one card; among Gen Z, this figure stands at 58%. Therefore, making the right kind of payments is crucial to reducing the debt burden.

Why does credit card debt grow?
Many cardholders pay only the minimum amount each month, while interest accumulates on the remaining balance. A LendingTree survey reveals that approximately 41% of US cardholders make only the minimum payment on at least one credit card. This figure is 58% for Gen Z and 19% for Baby Boomers. Data from over 1,500 cardholders shows that the average American cardholder with debt owes $7,756. At an average APR of 20.94%, paying this off could take nearly 27 years and incur around $13,000 in interest. Let’s look at seven easy ways to get out of debt.

1. Pay more than the minimum amount
Instead of paying just the minimum amount each month, pay more using your savings. This will accelerate the reduction of the outstanding balance and lower the interest charged. Making larger payments can help you clear the debt in a shorter period.

2. Convert debt into EMIs
If your credit card outstanding balance is high, you can ask the bank to convert it into monthly EMIs. Another option is to pay off the credit card balance by taking out a personal loan with a lower interest rate. A fixed monthly payment plan can make repaying the debt easier.

3. Set up automatic payments
Use the automatic payment facility to avoid missing your credit card payment due date. It is essential to maintain sufficient funds in your bank account for this. This ensures timely payments and helps you avoid late payment fees.

4. Adopt the Snowball Method
If you have multiple debts, start by paying off the smallest outstanding balance first. Then, focus on the next smallest debt. Clearing smaller debts boosts confidence in your repayment ability and provides the motivation to pay off the remaining debts.

5. Adopt the Avalanche Method
In this method, you make the minimum payment on all debts but allocate any extra funds toward the debt with the highest interest rate. Once that is cleared, you move on to the debt with the next highest interest rate. This approach focuses on eliminating high-interest debts first.

6. Curb Your Expenses
While paying off debt, it is also crucial to keep an eye on your expenses. Avoid unnecessary purchases and overspending; create a budget that balances savings and expenditure. This can help prevent the accumulation of new credit card debt.

7. Use Cash Instead of Credit Cards
Using cash for daily expenses and bills can help curb overspending. It also makes it easier to track expenses and helps avoid accumulating new debt on credit cards.

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