Credit card debt is one of the most stressful forms of debt, since it could get you caught up in a never-ending debt cycle. With high interest rates, oftentimes it can be difficult to pay off the balance in full, which means that each month your bill keeps getting higher.
If you’re using your credit card often for daily purchases and never paying off the balance in full each month, it’s likely that you’ve got a never-ending credit card bill. Luckily, with a few simple changes of your financial habits, you can get out from underneath this debt.
Follow these five tips for credit card debt relief:
1. Stop adding to your debt
If you’re in deep with credit card debt, the number one thing to do is stop adding to that debt. Cut up your credit cards or stash them away until the debt is paid off. By adding to your total debt, it will continue to spiral out of control. If you can’t afford to pay for something, then you should continue to save money until you can buy it outright. If you’re using your credit card for vital purchases such as rent or groceries, then you likely have a serious cash flow problem and should seek budget counselling.
2. Buy strategically not emotionally
Do you really need the things you are about to pay for with your credit card? Shopping feels great in the moment – after all, it’s called retail therapy for a reason – but it is also the most expensive form of therapy. Buying items impulsively or on emotion will keep you in a never-ending cycle of credit card debt. The best way to use a credit card is to only use it if you have money in the bank that you can use to pay of that debt immediately.
3. Say no to cash advances
A cash advance on your credit card may seem like the easy answer when you’re short on money, but it’s a very costly bad habit. The interest rates on cash advances are huge and are one of the most expensive types of credit card transactions. Remember that interest starts accumulating from the day you take the cash advance, so it can add up quickly.
4. Stay within an established budget
You don’t need to be an accountant to set a budget for yourself (just follow these tips). Once you’ve created a budget for yourself, stay within it! Use your credit card to only buy things that you have budgeted for and be sure to pay it off in full when the bill comes in.
5. Pay more than the minimum payment
While it is ideal to pay off the balance in full each month, sometimes it’s just not possible. However, paying just the minimum payment is a surefire way to keep you in that never-ending cycle of debt. Try to put more than the minimum payment towards the debt each month. If you’re not continually adding to the debt, this should help to pay it down faster. Try and put every extra penny you earn towards the debt, or reduce spending in other areas to try and increase your debt repayments.
Credit card debt can be a vicious cycle, but with a little financial advice, you can not only get out of debt, but stay out of debt. If your money situation is a mess and you’d like to learn what it takes to be financially well, our proactive budget mentoring service might be just the support you need. Contact us today for a free consultation.