The New York Fed reported that Americans had around $1.08 trillion in credit card debt in the third quarter of 2023, a 4.7% increase over last quarter. This is especially concerning given the elevated interest rates right now.
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Suze Orman, a TV personality and money guru, is known for sharing her struggles with using credit cards and accumulating five-figure debt. In an August 2023 blog post, she suggested these four options for getting yourself out of this common debt trap and saving on high interest charges.
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1. Look for Interest-Free Balance Transfer Offers
The compounding interest particularly makes credit card debt hard to pay off. Even if you’re making large monthly payments, you may be surprised how little goes toward your actual principal. That’s why Orman recommended seeking a balance transfer offer that gives you at least 15 months to pay off the amount without interest.
First, you’ll need to research 0% balance transfer cards and have good enough credit to qualify. Next, move your high-interest card balances to this new card. Note that you could pay a fee of up to 5% for the transfer. As long as you budget to repay the balance before the promotion expires, you can save a lot of interest. Just avoid making further charges.
2. Get Rid of Your Second Car
Having a second vehicle can add an extra car payment, insurance, fuel costs and maintenance expenses that you’ll have to budget for each month. That’s why Orman suggested carefully thinking about whether you really need that extra car.
While it may not be an option if both you and your partner commute to work, selling the second car would free up money to go toward paying off your credit cards. She also explained that you could always rent a vehicle if you only need one occasionally.
3. Consider a Second Job
Your main income might not leave much to pay off debts, but a secondary source should provide a roomier budget for such goals. You might work weekends or evenings at a local business or take on gig work for just a few hours a day. There are also passive options, including renting out a room or making money from digital products online.
If you feel uneasy about the time and commitment, Orman asked this question: “Would three months or six months of a gig give you the money you need to be out of credit card debt?” Considering the interest you could save, you’ll likely find the temporary sacrifice worth it.
4. Go Six Months Without Buying “Wants”
Acknowledging that this option particularly requires sacrifice, Orman proposed going six months without making any unnecessary purchases. This means eating at home versus a restaurant, looking for free entertainment versus buying concert tickets and so on. Use all your saved money toward paying off your cards.
You may find this very challenging if you’re used to buying whatever you want, but keep in mind you’ll be in a better financial place once your card debt is gone. Here are some tips for being more successful with this step:
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Use a budgeting app with spending limits.
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Look into meal planning.
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Always make a shopping list and stick to it.
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Consider using cash to both curb spending and avoid future debt.
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When possible, stay away from places that tempt you to overspend.
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Compare prices so you reduce expenses on essentials.
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If you’re unsure you need something, avoid buying it right away.
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Set up automatic payments to prioritize credit card payoff.
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This article originally appeared on GOBankingRates.com: Suze Orman Shares 4 Ways To Get Out of Credit Card Debt
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