Repaying your debt can often feel challenging. That’s why making a plan to manage your payments and balances can help. Take a look at these tips and discover some small steps you can take today that may make managing your debt easier.
Always pay on time
Payment history makes up 35% of your credit score. If you’ve missed a payment, pay as soon possible — it makes a difference. Credit reports will track if you are 30, 60, or 90 days late on payments.
Monitor your credit regularly
Review your credit reports regularly to make sure they are accurate, and to look for areas where you can improve. Order yours free at annualcreditreport.com. Credit Close-Up® offers eligible Wells Fargo Online® customers complimentary access to their FICO® Score. Don’t worry, requesting your score or reports in these ways won’t affect your credit score.
Pay more than the minimum
Always try to pay more than what’s due. This helps to pay down debt faster, save on interest expense and may improve your credit score.
Know your limits
Being close to or maxing out your credit limits may negatively impact your credit score. It’s a good idea to keep your balance on revolving lines under 30% of your limit.
Know your debt-to-income (DTI) ratio
Lenders look at the amount of debt you have compared to your monthly income when extending new credit, so it’s a good idea to keep your DTI ratio under 35%.
Take on new debt only when needed
Apply for and open new credit accounts only if you need them. Having too many accounts with balances may lower your credit score and may become difficult to manage.
Qualify for lower rates
See if you qualify for lower rates on your current debts, especially if your credit has improved or if interest rates have dropped since you originally applied. Wells Fargo customers can use the Check my rate tool to get rate and payment estimates, with no negative impact to their credit score.
Think before closing accounts
Closing credit card accounts may lower your available credit and could hurt your credit score in the short term. Consider keeping accounts open if they have a good payment history and a low or zero balance.
Build an emergency fund
Having funds set aside in a savings account may help you to avoid using credit cards for unexpected expenses.
Need help?
Contact the National Foundation for Credit Counseling (NFCC) in person, online, or by phone for in-depth, personalized financial counseling and education.
Explore different ways to pay down debt
We have options to help make your payments more manageable and may help to pay off your debt faster.
- Lower monthly payments
- Pay off debt faster
- Compare debt paydown strategies
Products to consider
- Personal loan
- Mortgage refinance
- Balance transfer
Before you apply, we encourage you to carefully consider whether consolidating your existing debt is the right choice for you. Consolidating multiple debts means you will have a single payment monthly, but it may not reduce or pay your debt off sooner. The payment reduction may come from a lower interest rate, a longer loan term, or a combination of both. By extending the loan term, you may pay more in interest over the life of the loan. By understanding how consolidating your debt benefits you, you will be in a better position to decide if it is the right option for you.
Fair Isaac: Certain information provided by Fair Isaac Corporation, San Rafael, California.
You must be the primary account holder of an eligible Wells Fargo consumer account with a FICO® Score available, and enrolled in Wells Fargo Online®. Eligible Wells Fargo consumer accounts include deposit, loan, and credit accounts, but other consumer accounts may also be eligible. Contact Wells Fargo for details. Availability may be affected by your mobile carrier's coverage area. Your mobile carrier’s message and data rates may apply.
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FAQs
Always try to pay more than what's due. This helps to pay down debt faster, save on interest expense and may improve your credit score.
What are three important tips for managing your debt? ›
Tips and Strategies for Managing Debt
- The Importance of Good Debt Management. ...
- Pay Bills When They Arrive. ...
- Prioritizing Debt Payments. ...
- Always Make the Minimum Payment to Avoid Fees. ...
- Create an Overview of Everything You Owe. ...
- Create an Emergency Fund to Avoid Unnecessary Debt. ...
- Pay What You Can Really Afford.
How to pay off $20,000 in credit card debt in 3 years or less
- Take advantage of a debt relief service.
- Consolidate your debt with a home equity loan.
- Take advantage of 0% balance transfer credit cards.
To pay off $8,000 in credit card debt within 36 months, you will need to pay $290 per month, assuming an APR of 18%. You would incur $2,431 in interest charges during that time, but you could avoid much of this extra cost and pay off your debt faster by using a 0% APR balance transfer credit card.
What is a key to proper debt management? ›
Hold Debt Service Payments At Less Than 25% to 33% of Gross Income. Use Credit Cards Only As A Convenience. Protect Your Credit. Pay Cash For Purchases. Review Debts Annually.
What are the three C's of a successful collections strategy? ›
By following the three Cs — communication, choice and control.
What are the 5 golden rules for managing debt? ›
5 Golden Rules of Personal Finance
- Spend less than you make. This may seem obvious, and boring, but spending less than you make is by far the biggest key to financial success. ...
- Stay out of bad debt. ...
- Invest often. ...
- Set goals & make a plan. ...
- Be patient.
If you can pay $100 a month, it might take you 25 months to pay off the debt. If the card has the same APR but an annual fee of $100, it might take 29 months. And if you can pay $300 a month for a 20% APR card with a $100 annual fee, it might take you 8 months to pay off $2,000.
Is $1,000 dollars in debt bad? ›
While that certainly isn't a small amount of money, it's not as catastrophic as the amount of debt some people have. In fact, a $1,000 balance may not hurt your credit score all that much. And if you manage to pay it off quickly, you may not even accrue that much interest against it.
How can I pay off $30000 in debt in one year? ›
The 6-step method that helped this 34-year-old pay off $30,000 of credit card debt in 1 year
- Step 1: Survey the land. ...
- Step 2: Limit and leverage. ...
- Step 3: Automate your minimum payments. ...
- Step 4: Yes, you must pay extra and often. ...
- Step 5: Evaluate the plan often. ...
- Step 6: Ramp-up when you 're ready.
- Using a balance transfer credit card. ...
- Consolidating debt with a personal loan. ...
- Borrowing money from family or friends. ...
- Paying off high-interest debt first. ...
- Paying off the smallest balance first. ...
- Bottom line.
During that time, you'll pay a total of $9,332.25 in interest for a total payoff cost of $14,332.25. 2.5% of the balance (inclusive of interest): It would take 505 months to get rid of your $5,000 credit card balance making just minimum payments at 2.5% of your balance. That's over four decades of payments.
How long does it take to pay off the $10000 debt by only making the minimum payment? ›
1% of the balance plus interest: It would take 29.5 years or 354 months to pay off $10,000 in credit card debt making only minimum payments. You would pay a total of $19,332.21 in interest over that period.
What are 5 ways to manage debt? ›
Be Done with Debt! 5 Ways to Do It
- Make More than the Minimum Payment. For every outstanding balance, you must typically make a minimum payment of 2% to 3% of your total. ...
- Tackle High-Rate Accounts First. ...
- Shop for Better Rates. ...
- Read the Fine Print on a Balance Transfer Card. ...
- Negotiate.
In order to manage your debt more effectively, you may want to consider these seven steps.
- Take account of your accounts. ...
- Check your credit report. ...
- Look for opportunities to consolidate. ...
- Be honest about your spending. ...
- Determine how much you have to pay. ...
- Figure out how much extra you can budget.
Examples of good debt include mortgages that provide a home and a valuable asset and student loans that provide job skills. Examples of bad debt include unchecked credit card debt and payday loans.
What are the 3 biggest strategies for paying down debt? ›
What's the best way to pay off debt?
- The snowball method. Pay the smallest debt as fast as possible. Pay minimums on all other debt. Then pay that extra toward the next largest debt. ...
- Debt avalanche. Pay the largest or highest interest rate debt as fast as possible. Pay minimums on all other debt. ...
- Debt consolidation.
5 Effective Debt Management Strategies
- Rework Your Business Budget.
- Improve Your Cash Flow.
- Review and Prioritise Your Debts.
- Review Loan Terms & Consider Refinancing.
- Increase Your (Profitable) Sales.
Examples of collection agent skills
- Communication. As one of the primary responsibilities of a collections agent is to understand current debt situations, contact debtors and communicate urgency for payment, communication is an important skill. ...
- Problem-solving. ...
- Empathy. ...
- Negotiation. ...
- Attention to detail. ...
- Technology.
7 steps to more effectively manage and reduce your debt
- Take account of your accounts. ...
- Check your credit report. ...
- Look for opportunities to consolidate. ...
- Be honest about your spending. ...
- Determine how much you have to pay. ...
- Figure out how much extra you can budget. ...
- Determine your debt-reduction strategy.
Payment history makes up 35% of your credit score. If you’ve missed a payment, pay as soon possible — it makes a difference. Credit reports will track if you are 30, 60, or 90 days late on payments.
Review your credit reports regularly to make sure they are accurate, and to look for areas where you can improve. Order yours free at annualcreditreport.com. Credit Close-Up® offers eligible Wells Fargo Online® customers complimentary access to their FICO® Score. Don’t worry, requesting your score or reports in these ways won’t affect your credit score.
Always try to pay more than what’s due. This helps to pay down debt faster, save on interest expense and may improve your credit score.
Being close to or maxing out your credit limits may negatively impact your credit score. It’s a good idea to keep your balance on revolving lines under 30% of your limit.
Lenders look at the amount of debt you have compared to your monthly income when extending new credit, so it’s a good idea to keep your DTI ratio under 35%.
Apply for and open new credit accounts only if you need them. Having too many accounts with balances may lower your credit score and may become difficult to manage.
See if you qualify for lower rates on your current debts, especially if your credit has improved or if interest rates have dropped since you originally applied. Wells Fargo customers can use the Check my rate tool to get rate and payment estimates, with no negative impact to their credit score.
Closing credit card accounts may lower your available credit and could hurt your credit score in the short term. Consider keeping accounts open if they have a good payment history and a low or zero balance.
Having funds set aside in a savings account may help you to avoid using credit cards for unexpected expenses.