It’s happened to most of us at some point – a few untimely expenses pop up, and suddenly that credit card has a life of its own.
The good news? There is hope. You can get control of your credit card debt today with a few simple steps.
Stop the bleeding
It might sound obvious, but the first step to cutting down your credit card debt is to stop growing it. If you have any direct debits connected to the card, make other arrangements for these to come out of a bank account. Then, use whatever means necessary to destroy the card so that you can stop accruing debt.
Pay more than the bare minimum
If you only pay the minimum amount each month, you’ll see many birthdays waiting for your credit card debt to decrease. In most cases, you will only be paying the interest on the debt without reducing what you owe. It’s time to sit down and make a budget, and look for ways to pay as much as possible off your credit card each month.
Work out your priorities
If you have debts on more than one credit card, your instinct might be to pay the largest amount off as a priority. Alternatively, try focussing on the card with the highest interest rate. It’s also worth knocking over your smaller cards first (and then cancelling them) so that you can concentrate on one monthly repayment.
Try a balance transfer
Many lenders offer great introductory rates on new credit cards. Some even offer rates of 0% for the first 6 or 12 months. This presents a great opportunity to work on getting your balance down, without being charged interest.
Beware though – it’s important to investigate what your interest rate will be after the introductory period. It’s also vital that you do pay as much as possible off the balance. If you don’t reduce your debt, and if the standard interest rate is higher than what you had before – you will only do further damage.
Save for a rainy day
Many of us get into trouble with credit cards because we don’t have adequate savings when something unexpected comes up. While you work hard at reducing that credit card debt, try to put a little bit in savings each month and build up a buffer. That way if you suddenly need a new set of tyres or a hot water service, you won’t undo all of your good work by whacking it on the credit card.
Put your hand up
If you can’t seem to get control of your finances and you feel like the situation is getting worse every day, it might be time to ask for some help. There are experienced financial counsellors and legal representatives who can help you to make a plan and get back on top of things again.