Keep Your Credit Card Debt in Check

Whether you have accumulated a large sum of credit card debt due to a job loss or a spending spree that got out of control, it can be quite difficult to break a habit that you have been accustomed to for so long. While most of us are raised to never carry a balance, and that we should pay them off in full every month, the lure of a new high priced electronics device or even the latest fashions have even the most budget savvy users using credit in times when they know that they should not. Just one purchase has a way of multiplying, and before you know it you have racked up so many charges that your monthly salary is not enough to cover them all. Combine this with an average credit card interest rate of 15% or more and even the smallest of balances can take you years to pay off if utilizing the minimum payment. While you may be feeling like you will be stuck in a credit card dungeon for the rest of your life, here are some simple tips that can help you keep your debt in check so you can finally dig yourself out of the hole that you have created.

First, avoid taking on any forms of new debt. When you have amassed more debt that you can comfortably afford, it can be tempting to transfer all your balances to one of those low interest rate offers that arrive in your mailbox. While this can help save you money, it will only work if you avoid using the now empty cards in the future until all is paid off.  You should also avoid using one of the many online payday loan companies to help you make ends meet until your next paycheck arrives. If you can’t pay it off right away, because you’re trying to make payments to several credit cards as well, you will most likely need to turn it into a rollover loan which will give you a set monthly payment, but will also result in more fees as well as more interest, which can be nearly impossible to handle on an already tight budget.

Second, learn to pay cash for everything. One of the hardest things to learn when you have become so accustomed to using that piece of plastic is to only buy things when you have the cash available. In order to be able to start making a dent in the debt you already have, you need to avoid taking on more and that means making all your purchases with either cash or your bank debit card. This will force you to rethink your purchases, making you less likely to buy that new pair of shoes, or a new TV when you know that you have a pile of bills waiting to be paid with the money that is currently sitting in your bank account. Over time you will become so accustomed to paying for everything with cash that you may wonder how you ever became so dependent on credit cards in the first place.

Lastly, setup a payoff plan. When it comes to tackling your credit card debt, determining which one takes priority over the rest can easily become overwhelming, especially if you have reached the point where the creditors have begun to call. The best process for paying off all your credit card debt is to organize all your cards by interest rate, from highest to lowest, and tackle the one with the highest interest rate first since that is the one costing you the most money. If, on the other hand,  you are feeling completely overwhelmed with all your payments and you need a vote of confidence to succeed, you could start by paying off the one with the lowest balance first, before switching to the interest priority process mentioned previously.

Regardless of the option you choose, you will choose one card that you will need to pay more than the minimum on. Pay as much as you can comfortably afford without taking extra cash from your other bills. Once one card is paid in full, you will take that entire payment and apply it to the minimum payment of the next card, and continue this process until they are all paid in full. You will soon be debt free with more money than you may know what to do with.

These are just a few of the tips that can help you keep your credit card debt in check. Setup a payment plan, and avoid taking on any additional debt, and you will be on your way to being debt free in no time.