Amanda’s Note: This was provided by an online contact.
If you struggle to pay your monthly credit card balance, you are not alone. One report published in October of last year revealed that the average American carries over $3,500 in individual credit card debt and that household credit card debt is more than $16,000 for many families. Credit card debt can build swiftly and become overwhelming; however, there are several strategies you can use to change how you think about credit cards and possibly reduce your overall debt over time.
1. Review Interest Rates
If you have more than one credit card, you should get into the habit of reviewing each card’s interest rate so you can be sure that what you are paying each month mostly goes to the principal balance and not to high interest rates. Some cards have a fluctuating interest rate, especially those offer no interest for a certain time period. If you do choose one or more cards with a low introductory rate, you should keep careful track of when it begins and ends.
When it comes to budgeting, examine which credit card has the highest interest rate and work on paying that off before you focus on cards with a lower rate. The more money you can put toward a card with a higher rate, the faster you can pay it off and avoid getting buried under high interest rates.
2. Equate Credit Cards With Cash
One reason so many people get into trouble with credit card debt is because it is much easier to hand a square of plastic to a cashier than it is paper money. Using a credit card is so simple and because you can enjoy your purchase now and think about the money later, it is easy to fall into impulse buying. However, when those purchases start to stack up, you may find that you cannot afford to pay your monthly payment once the bill arrives.
To change your impulse purchasing habits, ask yourself if what you are about to charge is necessary and whether you would buy it with cash. If the answer is no to both questions, then you probably should leave the store without it. Thinking of credit cards as money you are spending now, not later, may help you spend more wisely.
3. Save and Budget With Your Spouse
If you and your spouse are not on the same page regarding your credit card debt, it is time to create a united front. Sit down together and go over your existing credit card debt and then compare that with what you are still spending on credit each month. This can help you see where some spending might be cut or if any additional income can be put toward your debt.
There are several rules you can create with your spouse that might keep you both informed about the way you use credit. For example, you might agree that if either of you want to open another line of credit, the card should be one you choose together. Consider placing a cap on APR and interest rates that you both agree on to avoid cards that will only add to your debt.
4. Investigate Paths to Clearing Debt
Depending on the amount of your credit card debt, a variety of paths may be open to you. Take the time to investigate individual loan options that may help relieve a portion of your debt. Companies such as CURO Financial Technologies Corp, which is run by CEO Don Gayhardt, offers short-term loans to individuals who are striving for financial freedom. Other options that may be open to you include credit card consolidation and moving balances to credit union cards that often offer a lower interest rate and lower payments.
5. Save the Date
One way to get buried under a landslide of credit card debt is to consistently pay late and be subject to late fees that can total nearly all or more than the cost of your monthly payment. Department store cards in particular charge hefty late payments, even if the payment comes only a day late. If your card has a grace period, do not be tempted by it, as late payments can lower your credit score and prevent you from opening lines of credit in the future.
To avoid late fees and falling behind in payments because of them, create a credit card calendar on your smartphone or computer. Set up alerts the day before or the morning of the due date so you do not forget. When the alarm goes off, try to stop what you are doing and pay the bill right away. Be sure to note a difference in time zones, as a difference of even one hour could result in a late fee.
Getting out from under credit card debt can be difficult and time consuming. However, if you change the way you view credit and practice good spending habits, you may be able to clear much of your debt sooner than you think.