Although tackling credit card debt probably doesn’t rank highly on the list of things retirees want to do during their golden years, some people might not have any other option. The good news is that many of the best strategies for paying off credit card debt still apply during retirement. Here’s a look at the most effective ways to reduce your credit card debt after you’ve stopped working.
Adjust your budget
Making sure you’ve saved enough money for retirement requires careful planning. Managing your credit card debt is no different. To begin with, calculate the total amount of debt you owe across all credit card accounts. Then, create a time frame for paying this debt back. This will dictate how much money you need to set aside for your debt each month and will be the first step in helping you adjust your budget.
Instead of making drastic cuts that will greatly impair your standard of living, be willing to make minor adjustments here and there, like eating out less or renting movies instead of seeing them in the theater. For this method to work, you’ll need to be consistent and unwavering in your savings goals. In the long run, any amount of money — no matter how small — that can be redirected toward paying off your credit card debt will be helpful.
Once you’ve made a budget, put away those credit cards until you’ve put a sizable dent in your debt. Pay with cash or a debit card whenever possible.
» MORE: How to pay off debt
Tackle high interest cards first
Carrying balances on multiple credit cards? Consider eliminating all of the debt belonging to the highest interest card first while still making minimum payments on the other cards. This tactic will prove especially worthwhile if that high interest card has accrued a lot of debt over the years. What’s more, paying off all of the debt on your highest interest card can serve as a huge psychological boost that’ll encourage you to keep slashing your debt on other accounts.
Consider a low interest balance transfer
The credit card market is extremely competitive, and because your credit card issuer doesn’t want to lose you as a customer, it might be willing to lower your interest rate if you call and ask. If it doesn’t oblige, consider transferring your balance to a different card issuer with better rates. Some card companies even have 0% balance transfer offers, meaning you’ll pay 0% interest for an introductory period of usually 6 to 12 months. Be advised, though, that most transfers include a fee of 1% to 5% of the total amount being moved.
With the right mind-set, paying off credit card debt in retirement doesn’t have to be an overwhelming ordeal. Make a plan and stick to it. Taking advantage of balance transfers and tackling high interest cards first will help you along the way.
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