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Today’s economic environment can be a challenging one if you have credit card debt. The cost of living is climbing as inflation continues unabated, which can make it difficult to budget for your credit card payments. Moreover, the Federal Reserve’s federal funds rate target currently stands at a 23-year high. And since that’s the primary benchmark for consumer interest rates, your credit card interest rates may be higher today than they were just a couple of years ago, pushing your minimum payments higher, too.
This can quickly result in thousands of dollars in accumulated credit card debt. So, what should you do if you have $7,500 (or more) in credit card debt? Since $7,500 is often the minimum amount of debt that debt relief companies are willing to help with, you may have multiple options to consider now.
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How to pay off $7,500 in credit card debt
Here are three effective ways to pay off $7,500 in credit card debt:
Take advantage of debt relief
“In an inflationary environment, securing necessary debt relief is crucial,” explains Michael Broughton, founder and CEO of the credit-building app, ALTRO. “As interest rates rise, the cost of servicing debt escalates and burdens both individuals and businesses with higher payments.”
But, debt relief services can help in multiple ways. “Getting debt relief, whether through negotiating terms, exploring refinancing options or seeking assistance programs, provides essential financial breathing room,” says Broughton.
Here’s how can debt relief services help you pay off $7,500 in credit card debt:
Have an expert get you out of debt today.
Ask your lenders for help
Many lenders that offer credit cards also offer credit card hardship programs. These are typically short-term programs (usually lasting six to 24 months) that are designed to ease your financial burden in the event of a financial hardship. So, getting the help you need may be as simple as calling your lenders and asking for it.
Once you ask for help, your lender may ask questions about, and for proof of, your financial hardship. For example, if unexpected medical bills caused your hardship, your lender may ask for copies of those bills.
Nonetheless, if you qualify for a credit card hardship program, your lender may reduce your minimum payment, your interest rate or both, for a predetermined period of time. That could give you time to get back on your feet financially.
Take out a home equity loan
If you own your home, you may have quite a bit of equity that you can tap into. The average American homeowner can safely tap into around $193,000 in equity (without losing too much of a stake in their homes). Importantly, home equity loans typically come with competitive interest rates.
While the average credit card interest rate currently stands at over 20%, the average home equity loan interest rate is just 8.63%. So, if you use a home equity loan to pay off your $7,500 in credit card balances, you could realize significant interest savings.
The bottom line
High credit card interest rates and minimum payments can be difficult to stomach in today’s inflationary environment. So, if you owe $7,500 in credit card debt or more, it’s advantageous to pay your debt off as soon as possible. Debt relief services can help. You may also get short-term relief by reaching out to your lenders. And, if you own your home and have maintained a good credit score, you could save on interest by using a home equity loan to pay your credit card debt off. In any case, it’s important to act now. The faster you take control of your credit card debt, the faster you’ll be able to put it behind you.
