How to Handle Credit Card Debt
Credit card debt can be difficult to deal with. A big reason why is because credit cards charge very high interest rates. If you don’t pay off your bill in full when it arrives, you’ll be on the hook for a lot of interest. Over time, this interest builds up and makes it very tough to get things under control. Some people end up spending more in interest than they spent on the actual items they purchased on the card!
This can lead to serious financial troubles. Not only is the credit card debt an issue itself, but if interest is increasing the size of your monthly payments, you’ll have less money available to afford the rest of your expenses. This could mean you’ll have to take on additional debt to make ends meet, and that just makes your financial issues worse. It’s a cycle that can be very difficult to get out of.
A lot of people know that credit card debt can result in big financial problems, but they aren’t sure what to do about their situation. Here are some tips that could help you handle credit card debt and put yourself in a better financial decision.
Contact your Creditors
When you have credit card debt, you might not want to hear from your creditors at all. This is a natural reaction, but the truth is that sometimes speaking with your creditors can be helpful.
Contact your creditors and let them know that you want to repay your debts, but you’re having trouble making the payments as they currently stand. Some creditors may be willing to reduce the interest rate you’re being charged or give you more time to pay off your debts, which will make each individual payment smaller. This could help make it easier to afford your credit card debt payments and your monthly expenses.
Keep in mind that your creditors have no obligation to work with you, but if you explain yourself clearly and have a good history of paying your bills on time, they may listen and help you out.
Stop Adding on New Debt
If you’re hoping to pay off your credit cards, one of the first things you’ll want to do is stop adding on more debt. It’s almost impossible to reduce your credit card balance to zero when you’re still putting charges on your cards. That’s why it’s a great idea to stop using your credit cards while you’re working to pay them off.
This will mean living on cash and the money in your bank account. Since this is the case, you’ll have to make sure to budget properly and track your spending (which is a great habit anyway) so that you don’t run out of money before you’ve paid for all your expenses.
If you want to pay down your credit card debt, you’ll also probably want to free up some extra money to help you accomplish this goal faster. Look at your budget and see where you can make cuts. Any money that you can trim from your budget can be applied to your credit card debt and that means you’ll pay your debt more quickly (which will save you interest payments).
Have a Strategy
Having a strategy for paying off credit card debt can help you stay focused, reduce your debt more effectively, and keep you motivated. One of the most common strategies is to focus your efforts on paying off the card with the highest interest rate. This card costs you the most each month, so getting rid of the balance on it as fast as possible will save you money. To use this strategy, pay the minimum balance on all of your cards each month (so you don’t miss any payments and incur any penalties) then put the rest of the money you have towards the most expensive debt. You’ll save money over time as you won’t be on the hook for as much interest.
Another strategy is to focus on the card with the smallest total. While operating in this manner won’t really save you money, it will help you get pay off one of your credit cards quickly. This can be a big psychological boost that will motivate you to keep going.
Whatever strategy you choose, make a plan, stick with it and you’ll see your credit card bills go down over time.