The use of credit cards is a way of life for most of us. Long gone are the days when we carry cash on us to pay for items throughout the day. Even farther gone are the days of writing checks to pay for things. Now granted, some people still prefer to pay with cash, and others are stuck in their ways and use checks for everything. The world is shifting, though, and credit is the way most people lean towards.
Managing your credit card debt can be tricky, especially if you have been using them to get your basic needs, such as food and gas to get to work. Let’s take a look at some ways to deal with debt in a smart way.
- First, and maybe the most important for some of you. If you are struggling to pay the balance off every month stop using them. It sounds easy, but it is not. When you use the card to purchase your daily needs it is hard to stop using it. But eventually, they will be maxed out and you will have to stop using them anyway. And since they are maxed you will find yourself in even bigger debt. Debt that will be even harder to pay off.
- When paying off your debt, unless you hit the jackpot, you will have to take chunks out of it at a time. If you have one card you will want to pay as much as you can on it, without taking away from your other bills. If you have more than one, you will want to pick the one with the lowest balance and work on paying it off. Once that one is zeroed out start working on the next.
- Consolidate your credit cards, and all your debt, if possible, into one payment. If you want to do this through a higher balanced credit card, use a credit card compare site and find one with better interest rates than what you currently have. If you have good enough of credit to get a debt consolidation loan that would be the best bet because you will not have monthly recurring interest added on.
- Pay more than your minimum monthly payment. As mentioned above, pay as much as you safely can to get the balance down. The monthly interest that is tacked on can increase the balance quickly. Paying the minimum payment will usually only cover the interest that you are being charged, so it will never come down if you pay the minimum amount due.
- If you are finding yourself in this situation more often than you should, it may be time to go old school and start paying with cash. This is usually not the best way to approach it, but if you simply cannot control your spending you need to make a change. Even if it is only for long enough for you to get things under control, it is a step that needs to be done.
If you simply do not understand why you should stop using your card you need to do something. Sit down at a table and get a scrap piece of paper. Write down how much you spend on items every month. How much the actual cost of them is. Now, go to your bill and see how much the interest is that they are charging you every month. Now take that interest amount and multiply it by twelve.
That is an estimate of how much you pay in interest every year. That is the amount of cash going out of your pocket for purchases that should have cost you the original amount times twelve. Now you should understand why it is so important to get credit card debt under control.