Credit cards come with many benefits and responsibilities. However, spending too much or borrowing large sums of money from your credit card company will lead to many problems—especially when you find yourself struggling to pay your bills. When your debts get out of control, they can affect your emotional, physical and mental health. If you find yourself buried in a large amount of credit card debt, it’s best to take a step back and evaluate your situation before you tackle the problem.
Why You Should Take Credit Card Debt Seriously
When it comes to credit card debt, time is not your friend, but your enemy. Credit card debt is considered among the worst forms of debt you can accumulate. This is because credit card issuers lure people with low introductory annual percentage rates and high credit lines. However, these rates eventually expire, and before you know it, you’re faced with an overwhelming amount of debt.
Aside from that, credit card debt is difficult to pay off because the interest rates are often high. If you’re only making minimum repayments each month, paying off your balance will take longer, and you’ll also pay a lot of interest. This is the reason why credit card debts must be taken seriously, and you should be aware of your monthly interest rates and balances. Thankfully, there are services like LendVia that help you manage and consolidate your debts.
5 Ways To Manage Your Credit Card Debt
Paying the minimum payments won’t help you manage your debt effectively, especially when you own multiple cards. Here are five tips to help you pay them off sooner and manage your debt:
1. Set Realistic Goals
Managing your finances to pay off all your debts can be overwhelming. It’s important that you look at the situation realistically and set attainable goals. Don’t aim to pay off everything you owe in a month or two, as this isn’t attainable. Instead, create realistic goals each week or month. Make sure the amount you dedicate to paying off your debts will leave you enough for other expenses. When you set realistic goals, you won’t feel overwhelmed, and you can monitor your progress effectively.
2. Create A Spending Plan
A spending plan acts as your budget for the month. Creating one will give you an idea of your expenses and your current income, to ensure your finances are allocated correctly. In order to create an effective spending place, you’ll need to evaluate your needs and wants. Making short-term sacrifices can be vital in managing your money so you can pay off your debts sooner. Once you’ve devised an accurate spending plan, ensure you stick with it so you won’t need to borrow more money to spend on your other needs.
3. Change Your Saving Habits
Now that you’re spending less money, you should also examine your saving habits. Proactive saving is a valuable step in managing your finances and saving you from credit card debt. Build an emergency fund with any additional money remaining after you’ve paid all bills and expenses. Having one with substantial savings ensures you won’t be forced to use your credit card if an emergency expense arises. Aside from that, avoid spending your work bonus, tax refunds and other monetary gifts. You can use them to pay off your existing credit card debt or add it to your emergency fund.
4. Stop Using Your Credit Cards
While you’re managing your credit card debts, make sure your freeze all your credit accounts so you won’t be tempted to use them. Remove the credit cards from your wallet, too, until you completely pay off all of your outstanding balances. You should use cash or debit cards when paying for your essentials, as this will help you stay on track with your spending plan.
5. Follow A Strategy To Pay Off Debt
One way to pay off multiple credit card debts is to prioritize which account to pay off based on its monthly or annual interest rate. When you pay off the account with the highest interest rate, you reduce your overall interest payments. Another strategy is to pay off the card with the smallest balance. Paying one account off completely will give you a sense of accomplishment and motivate you to complete all outstanding payments.
Another strategy for those with multiple debt sources is to join a debt consolidation program, so that you only have one place in which to direct all of your payments, and there’s no need to worry about missing deadlines.
Many are scared of credit cards because they think they can’t control their spending. Unfortunately, this is the reality for some people. However, when managed correctly, credit cards can be useful. When sorting out your credit card debt, there are different strategies you can use to pay off the balance, from changing the way you spend and save to implementing new payment strategies. Paying off credit cards takes patience, sacrifice and determination, but it’s all worth it to achieve a debt-free life.