Creditcard debt is another type of debt that can very quickly get out of hand. All of a sudden, you have thousands of dollar of high interest bills on your credit card that seems almost impossible to pay back. But it can magically turn that looming mountain of debt into something that feels more within reach with a strategic plan for paying it all off. Well, for those who stand before a $20,000 credit card bill, how many months does it take before you are able to pay off your balance? In this blog post, let us look at various examples in order to illustrate the repayment periods.
The Credit Card Debt: Its Need for Repayment
Having numerous credit cards in your hand and using them regularly by maintaining high balances are very dangerous for your economy. You spend your money to pay for costly interest fees monthly but without reducing your balance even by a single dollar. Having high credit card balances also have an adverse effect on your credit. In addition, they strip you of your credit management capacity; you are unable to apply for credit cards responsibly or get better rates on loans. When it comes to utilizing credit cards, it is important to develop a plan for how it will be repaid. The sooner that you start whittling away at the $20 000, the better for you.
How Aggressively You Pay Determines the Time Frame
Of course, it will take a certain amount of time to pay off credit card balance and the time required to do that, depends on how fast you are able to pay off the balance every month. It will therefore take much longer to pay the minimum due instead of designating bigger portions of the month’s payment. Let’s compare three different payment scenarios on a $20,000 balance charging 20% interest:Let’s compare three different payment scenarios on a $20,000 balance charging 20% interest:
Minimum Payment: Minimum monthly repayments on most credit cards are 1% of the balance plus fees and interest. If you only paid the minimum amount on a $20,000 balance, you’d be paying it off over 28 years and $43,000 in total, including interest.
Moderate Fixed Payment: If you commit $500 monthly, you could get rid of your $20,000 credit card balance in roughly 4 years and 9 months and incur $5,500 in interest fees.
Aggressive Fixed Payment: If you agree with paying $1000 per month, it will take you slightly over two years to pay off the balance and the interest expenses will not exceed $3000.
Therefore, it is evident that the more money you pay to your credit card every month the less you pay in the long run.
Ways to Settle a $20,000 Credit Card Balance Faster
Let’s say you have a five-figure balance on multiple credit cards; it can be more challenging to pay down that amount gradually. But you can speed up the debt repayment process by:But you can speed up the debt repayment process by:
Tracking Spending: Determine what is making you rely so much on credit and cut out unnecessary spends. Instead of spending that money on other things, try and pay off some of those debts.
Lowering Interest Rates: Think about balance transfer credit card with no interest for some time so that more money is directed towards the principle. You can also explore debt consolidation loans with lower fixed rates to consider.
Finding Additional Income: Increase your earnings and get another job so that you can have more money to pay off the credit card balances. Every extra $100-500 helps.
Using Windfalls Wisely: Save any one-time money such as tax rebates or bonuses towards credit card balances. Do not give in to the temptation of lifestyle creep.
The faster one starts to get serious about paying off credit card bills, the faster one will be able to free themselves from it. This way one is in a position to master the situation rather than the situation mastering one through having a plan.Plug away each month, using the budget, reduced rates and extra revenue. The ability to be dedicated and disciplined means that you can eliminate that $20,000 balance much faster than you imagine possible.
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