It is not always possible to go through life without having to borrow money or have a credit card at your disposal. This is especially true for young couples who just got married or students who have student loans and credit cards to pay off.
Other times we develop bad spending habits, which may force us into credit card debt just because we need a particular thing. We all need to learn from our mistakes as well as learn how to manage that credit card properly, so it does not become an enormous burden.
To know how to manage credit card debt, read on and take the bull by the horns to take control.
First Things First
This is the most important thing you need to do to start managing that credit card debt, which is to stop spending! It is easy to say, but there are easy ways you can save money every month to improve your situation and lower your debt.
Get the Interest Rate Lowered
If you are paying your credit card on time and you are up to date, you can ask them for a better interest rate. It is as simple as that, and this step will save you a lot of money in the long run.
Contact the issuer of the credit card and get hold of the representative that works with your credit card debt. It is not easy to do this, like asking for a raise in your salary, so go here for an easy way to do it.
Stop Spending Easily
A good motivation to stop spending is when you want to buy something with your credit card, go, and find out the true cost. Before buying the item, phone your credit card company and find out how much fees and interest they will charge you.
Do the addition and see how much you will save on that product if you rather save the money and buy it in cash. This will help to motivate you to stop buying so quickly with a credit card, which will cost you in the end.
Pay More Than the Minimum
If you have just one or two credit cards, this can easily be done by paying more than the minimum amount per month. This will save you a lot of money in interest if you pay the amount much faster than the original agreement.
It will also help to improve your credit score for when you need to make a home loan or buy a new car. This will also help to lower your credit utilization rate, which is the difference between how much credit you owe and what you are allowed.
So if you have a credit of 5,000 dollars and you are allowed to have 15,000, the difference is your utilization rate. If you pay more than the minimum, your credit score will improve, and you will have more money in your pocket in the end.
This utilization rate will also be used to determine your credit score, so you should try to keep it low.
Always Be On Time With Payments
If you make your payments late, the credit card company will make you pay a fee for that, so more money out of your pocket. Late payments will always have a bad reflection on your credit score as well, so keep your record clean.
As mentioned before, if your payments are on time, you will have the courage and boldness to ask for a lower interest rate.
Budget Your Money
Many people do not like this word, but a good budget will help you to improve your spending and to better manage your finances. Learn from an early age to properly manage your money, so it will be much easier for you when you are older.
It should be your primary goal to stay inside that budget no matter what, even if you are really tempted or nagged to buy something. You can always buy that new gadget or device at a later stage, and the price may have come down by then.
Tips to Pay Off Credit Debt
Take a long hard look at your finances and apply all the rules to help to manage your credit and your money. If you have more than one credit card, take a look at the following ways how to get rid of credit card debt.
One Card At a Time
If you want to follow the rule of paying more than the minimum, you should focus on just one credit card at a time. Pay all that money you are currently paying extra on all of your cards on just one single card, which will drastically lower overall costs.
But you will ask which one of the cards should you focus on, and how will you determine which one? There are two ways you can go about determining which credit card to tackle first.
Highest Interest Rate
The first method is to take a look at your credit cards and see which one has the highest interest rate. To start paying extra money on the one with the highest rate will save you a lot of money in the long run.
This way, you can start getting rid of your most expensive credit card and work your way down the list. But if the interest rates of your credit cards are the same or very close, you can use another method.
The Lowest Balance
With this method, you can take the credit card with the lowest balance and pay all the extra money on that one. This will help to pay it off quickly, and then you can go to the second card and work your way up to the largest balance credit card.
It will reduce the number of credit cards, and if you are lucky enough, you can be rid of the debt in a short period.
Summary
The overall picture is to get hold of your finances by controlling your spending and staying within budget. This will also help make your life much less stressful and leave you with more money for a well-earned holiday.
The best thing about learning new things is that you can teach it to your children so they will have more meaningful lives. So take charge and earn yourself and your loved ones a better, credit-free life.