How to pay off credit card debt during the coronavirus pandemic

Credit card debt during the coronavirus pandemic has spiked due to reduced incomes and unemployment. If you're finding it difficult to pay off debt — whether it's student loans, credit card payments, or mortgage — right now, you're not alone.

It's time to make your personal finance a priority. To save your bank account and keep up with the bills, you may want to research some debt relief options. Here are four ways to pay off your debt at affordable interest rates, as well as tips to stay on top of monthly payments.

1. Personal loan
2. Balance transfer credit cards
3. Debt snowball method
4. Debt avalanche method

1. Personal loan

One way to make paying off your debt more manageable is to take out a debt consolidation loan. Similar to debt refinancing, a debt consolidation loan is a personal loan that lets you combine all of your existing credit card balances into one monthly payment.

SHOULD I USE A PERSONAL LOAN TO CONSOLIDATE DEBT?

There are two big benefits to using a personal loan to consolidate debt:

• You can find a lower interest rate (depending on your credit score)
• Interest rates are often fixed, so they don't fluctuate over time

If you decide to go this route, your first step should be to compare your personal loan options. Ideally, you should look for a loan that has a lower interest rate than the one you’re paying now. When your goal is to keep your payments as low as possible, you should also look for personal loans with long repayment plans.

Once you’ve taken out a personal loan, the next step is to focus on making sure you continue to pay down debt. With that in mind, here are some tips for staying on top of your loan payments and ultimately lowering the overall amount you owe:

• Make your payment on time every month: Payment history accounts for 35 percent of your credit score. Continually making your payments on time is the best way to ensure that your score stays in good shape.
• Put any windfalls to good use: When you can, pay more than your monthly payment. It will help you pay off your loan faster and you’ll save on interest charges long-term.
• Hide your cards: The last thing you’ll want to do once you’ve paid off credit cards with a loan is to rack up new balances. Do your best to avoid using your cards until you’ve paid off your debt entirely.

HOW DOES DEBT CONSOLIDATION AFFECT YOUR CREDIT SCORE?

2. Balance transfer credit cards

If you don’t like the idea of taking out a personal loan, exploring balance transfer credit cards is another viable option. As the name suggests, balance transfer cards allow you to transfer all of your existing balances onto a single card. Many of these cards also offer an introductory 0% APR period, which gives you the chance to pay down your debt interest-free for a set period of time.

WHAT IS THE LIMIT ON A BALANCE TRANSFER CARD?

The process of shopping for balance transfer credit cards is similar to shopping for a personal loan. The first thing to do is to research the available options and compare their terms.

3. Debt snowball method

Another alternative method for tackling credit card debt is called the debt snowball method. In this case, you pour the majority of your focus into paying down one credit card balance at a time and make the minimum payments on the rest of your cards.

Use a debt snowball calculator to calculate how long it will take you to pay off your debt.

The debt snowball method dictates that you focus on paying down your smallest balance first before moving on to your next-smallest balance. This method allows you to collect a series of small “wins” when you’re first starting out, which will hopefully help you to feel motivated to pay down debt, even as the balances get larger.

HOW DOES THE DEBT SNOWBALL METHOD WORK?

4. Debt avalanche method

The debt avalanche method is similar to the debt snowball method, except you start paying down the balance with the highest interest rate first. While it may take you a little bit longer to start to see progress this way, you’ll save money overall because you’ll pay less in interest charges over time.

HOW TO CLEAR YOUR CREDIT CARD BILL FAST