It doesn’t take much to get into credit card trouble in today’s “swipe it and forget it” economy. Nearly every store is plastic-for-payment friendly. You don’t even have to open your wallet! Tapping your phone or watch will do. Online shopping is easier than ever. Months can literally fly by without your having to touch an actual dollar bill.
All this convenience leads to a complete disconnect in how people spend money. Anytime you can delay actual payment in the spending moment, danger lies ahead. Did you know the average U.S. household carries about $6,900 of credit card balances over every month? Which means the debtor isn’t even scratching the surface of paying down the principle. Positive for credit card companies. Major financial drag on the American consumer.
If your goal is to eliminate your credit card burden, simplification is the key. Here are a few strategies for getting started:
Use the scissors.
The only way to make meaningful headway toward getting out from under credit card debt is to stop adding to the balances. This starting point can often be the most difficult. Using credit to fill in the gaps between paychecks is a hard habit to break. The solution? Rid yourself of the temptation altogether. Cut your cards up and don’t look back.
Tackle the smallest balance first.
Most people with credit card issues have multiple balances to deal with. Pay off whichever one has the smallest balance first. It’s so satisfying to have one less to worry about. Now there can be exceptions if astronomical interest rates are involved. But generally speaking, ridding yourself of one account can feel like an enormous win. The psychological boost of getting rid of one can often lead to greater progress and consistency in the long run too.
Up paydown speed with consolidation.
Explore your options on consolidating your debt to a lower interest rate card. The lower the rate, the higher the amount of your monthly payments can go toward chipping away at principle. You may be surprised at what options are available to you. Some credit card companies even offer 0% deals (0% for balance transfers and 0% interest for 12 months). Do thorough research and make sure to read the fine print closely.
Lower the overall debt balance. Every. Single. Month.
Here’s where ongoing discipline comes in. You’ve made the decision to finally get your debt under control. Now make certain that no matter what, you decrease the total balance owed, every single month. Compare where you are now with the previous month’s balances. Even if progress is slow, the consistency will make all the difference.
No more new credit cards.
Most people need one, maybe two cards, tops. Even though the temptation to get a new fancy card will be around, don’t fall back into those old ways. Store cards tend to be the most enticing. Sure, a credit line at your favorite shop sounds like a great idea, with all the perks, coupons, and up-front savings. Avoid this slippery slope completely. Consider it a challenge to outsmart the retailers and marketers. Stay in your lane with your credit card use from here on out.
Best of luck with finally getting your credit card debt under control. If you’d like any guidance along the way, give us a shout.