While credit card debt may be common, there is a difference between carrying debt forward that you have accounted for in your budget and will pay off over a set number of months versus carrying debt forward that you are struggling to pay back.
The truth is, credit card debt can quickly spiral out of control. Follow the tips below to help you get your credit card debt under control. And if you cannot reasonably pay back your credit card debt within the next three to four years, we encourage you to explore how bankruptcy can help you get the fresh financial start you need.
Credit Card Best Practices
The best practice is to pay off your credit card bill in full and on time each month.
Using a credit card has many advantages, such as rewards points and other benefits like fraud protection or coverage for damage to a rental car. Swiping a credit card is easy and generally safer than cash transactions. However, swiping can be too easy, leading to overspending.
Keep Credit Card Use Under Control
Just as you must when you use a debit card, keep track of your spending when you use a credit card. The costs of necessities like gas and groceries add up. And charges for incidental and impulse purchases add up.
If you find that you are consistently charging more than you can afford to pay off in full, stop using your credit cards for a while. Use only your debit card, which draws immediately out of your checking account, or use cash for a while. Only use your credit cards again when you are certain that you can use them without overspending.
Getting Your Credit Card Debt Under Control
If you are carrying credit card debt forward each month, now is the time to take control of your finances and handle your credit card debt.
- Make a list of your credit card debts and the accompanying interest rates.
- Pay down the card with the highest interest rate first.
- Rein in your spending.
- Do not make new charges.
- Make paying off your credit card debt a priority.
Always Make More than the Monthly Minimum Payment
Your credit card’s minimum monthly payment is the smallest amount of your balance you can pay and still meet the terms of your cardholder agreement. If you are consistently only able to make your minimum monthly payment, it is a red flag that you may have a serious debt problem.
As we note in our article What It Really Means to Make Minimum Monthly Payments, if you make only your minimum payment it will take years to pay off your debt, assuming you do not make new charges. Over the course of these years, you will continue to accrue interest charges and you will ultimately pay back far, far more than the principal amount you charged.
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If You Are Struggling To Pay Off Your Credit Card Debt
If you are struggling to make ends meet, and you simply do not have enough income to reasonably pay down your credit card debt, then bankruptcy might be the debt relief solution for you.
Find out more about being debt free in our guide: All About Debt Relief
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