Debt Snowflaking: Using Small Amounts to Reduce Your Debt Faster

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When it comes to savvy credit card use, it’s vital that you avoid racking up large amounts of debt.

Unfortunately, many of us fail to track our spending, and before we know it, we’re drowning in credit card debt.

Getting out of debt can be challenging, even to the most competent of us.  However, it’s possible to boost your pay off efforts with a process called debt snowflaking.

What is Debt Snowflaking?

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Could a P2P Loan Help You Pay Off Your Credit Card Debt?

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One of the most difficult things to deal with is credit card debt.

Let’s face it, when you have a lot of credit card debt it feels like a huge weight on your shoulders that pulls you down.  I’ve been there.  I know what it feels like when your paycheck comes in and a good portion goes back out in credit card payments that barely put a dent in your total credit card debt.

When you have a lot of credit card debt, getting rid of it is hard because you dealing with high interest rates.  A good portion of your payment every month goes toward interest, rather than reducing your principal.

This problem is compounded when you have multiple credit cards with high balances.  You are paying different interest amounts on different cards, and it can really slow your progress.

In some cases, you can help your situation with a debt consolidation loan, in which a larger loan is used to pay off several smaller loans.  The problem is that it is hard to find an unsecured loan that will pay off all of your credit card debt if you go to a more traditional bank.  Banks have been real tight with credit and they aren’t quick to give out a loan to pay off another debt without there being something to secure your loan.

A balance transfer to another credit card could be an option but only if your credit is good enough to get a low interest rate and a credit limit large enough for the transfer.  Besides, if you’re still working on building good credit card habits then opening a new credit card may not be a great idea.

So what can you do to help pay off credit card debt?

Instead of relying on a more traditional bank, or putting your home at risk through a secured home equity loan, it’s possible to see if you qualify for an unsecured loan through P2P lending.

What is P2P Lending?

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Use a Balance Transfer Credit Card to Save Money as You Pay Off Debt

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When you have high interest debt, it can slow your efforts to pay that debt down.

The higher the interest rate, the greater the percentage of your payment going toward interest — instead of reducing your principal.

When high interest debt is involved, it can take years, and hundreds of extra dollars, to pay off your debt.  Even if you are paying more than the minimum.

Instead of sticking with the same high interest loan throughout the term, consider using a balance transfer to get a temporarily lower rate.

What is a Balance Transfer?

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How Many Credit Cards Do You Have?

Credit cards have become ubiquitous as a method of payment.

Indeed, it’s much more common to see a customer pull out a credit card than pull out cash.  According to the Federal Reserve, in 2008 the average cardholder had 3.5 credit cards.  However, I have to admit that I have had many credit cards over my life.

One of the reasons that many of us seem to accumulate credit cards, though, has more to do with trying to keep the credit score intact than anything else.

Collecting Cards for Credit History and Limit

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