Managing your Credit Card Debt
Managing your Credit Card Debt
If you are struggling with credit card debt, you are not alone. An average Ohio household has $5,446 in credit card debt (ValuePenguin). While that is less than most other states (congrats, Ohio!), there is still a crisis as America approaches $14 trillion in debt. Here are some tips provided by the Ohio Credit Union League about how you can deal with credit card debt.
Assess your financial situation. Come up with a list of everything you owe, including monthly bills, credit card balances and the annual percentage rate (APR) for each card. Then, compare expenses with income.
Prioritize your spending. Before tackling credit card debt, be sure to cover the basics first, such as food, housing and clothing. Next, pay the minimum amount on all secured debts, like your home and car loans. Then, start working on paying down credit card debt with useful tools like the Credit Karma Debt Repayment Calculator, followed by student loans. Try to use cash or debit cards only while paying down debt. Above all else, pay at least the minimum balance on all outstanding debt to avoid hefty late fees.
Establish a budget. Once your debts have been prioritized, it’s important to come up with a budget to track spending and minimize credit card debt. Use online tools like Money Under 30 to get started. Try to adhere strictly to your newly established budget.
Secure a better rate. Negotiate a lower interest rate on your credit cards. According to How to lower your credit card interest rate (creditkarma.com) sometimes all it takes is a simple phone call to (politely) request a better rate. Shaving off even a percent or two could save you hundreds of dollars while repaying your debt.
Decide on a strategy. When paying down credit card debt, it’s important to settle on an action plan. There are two main ways to do this. One is to focus on paying down the card with the highest interest rate first, while making minimum payments on the other cards. This is the fastest way to decrease credit card debt, eventually freeing up more cash to pay toward the lower interest rate cards and creating a snowball effect. The other strategy is to pay the lowest balance first, while paying minimums on the others. Though not as cost-effective, this is the fastest way to get rid of debt on a single card.
Stay focused by creating concrete goals and staying motivated. Keep your eye on the prize! Perhaps getting rid of credit card debt will afford you a down payment on a house, new car or dream vacation. Writing your goals down and keeping them in your wallet or purse is a great way to keep focused on the goal. When tempted to overspend, take a peek at them for a big picture reminder.
Need more assistance with your credit card debt? See how Unity Catholic can help here!