Overwhelmed by Credit Card Debt? Take these Steps to Improve your Finances

The aspects that consumers love the most about credit cards are safety, convenience; being able to track spending and often earning rewards are unfortunately the same qualities that cause so many people to accumulate high levels of debt on them. 

If you’re unfortunate enough to have accumulated large sums of credit card debt, chances are that it’s leaving you feeling overwhelmed and stressed because you think that you’ll never be able to repay it all. However, the good news is that there are effective strategies and tips that can be implemented to help ensure that you’re able to repay every last penny in full.

Target One Card at a Time

Although minimum monthly payments will be required on each of your credit cards, paying a little extra over and above this amount on the card that carries the lowest balance will help lower its balance just that bit quicker. Once this card has been paid in full, take the amount you were paying on it each month and add it to the minimum payment amount on the next card in line to be repaid – and keep repeating this strategy until all credit cards and store cards have been paid in full.

Request Reduced Interest Rates

In many cases, getting the interest rate reduced on a credit card can be as easy as contacting the issuing company directly and asking – provided that you either have a fairly decent credit score or you’re a long-term client that always makes payments on time. 

If any of your other credit cards have lower interest rates, be sure to inform the customer service representative that you’re dealing with – in many cases, they will at least be able to match it.

Transfer Balances to Interest-Free Cards

These days, many new credit cards offer interest-free introductory periods to customers who want to transfer credit card balances over to them. Interest-free timeframes can range anywhere from six months to as long as 18 months in some cases.

While this is an excellent strategy to use to save on interest charges, keep in mind that you will need to commit to repaying the balance in full before the introductory period expires. Failure to do so can result in hefty interest rates being billed on outstanding balances.

Commit to Not Accumulating More Credit Card Debt

Once you’re on the journey to get all of your credit cards fully repaid, it’s crucial that you not take on any further consumer debt. After everything has been repaid, you’ll usually be able to start saving a portion of your income each month that can either be put towards an emergency fund or invested in a retirement fund. 

If you’re feeling overwhelmed by the amount of debt you’re carrying and aren’t sure how to go about putting a plan of action into place to repay everything, contact our financial advisors today. We look forward to being able to assist you with becoming financially independent over time. 

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Break These Bad Credit Card Habits

Bad credit card habits not only cause chaos with your credit score; over time, they will result in you accumulating more debt than you can afford to comfortably repay. Your long-term financial plans can also be derailed completely, which is why it’s essential that you eliminate these bad habits right away.

Failing to Inspect Credit Card Statements

While it may seem like nothing short of the most boring chore on earth to check your credit card statements thoroughly, the truth is that perusing each line item on them can help prevent any fraudulent purchases from being added without your knowledge. 

If you notice any charges that you haven’t made, you’ll need to notify your credit card provider immediately so that the necessary actions can be taken to reverse them. Another aspect you should always check is your credit limit – over time, your bank can change this without notifying you and this can result in some hefty fees being charged if you exceed your limit.

Only Paying Minimum Amounts

Credit card companies provide a convenient feature in that they only require you to repay a small amount of your outstanding balance each month. While this may seem handy, you will not ever be able to repay your card in full if only minimum require amounts are being applied. In addition, you’ll be paying hefty amounts of interest on the outstanding balance.

When the time comes to make repayments, always ensure that you pay as much as you possibly can against the outstanding balance. Over time, you’ll save thousands of dollars in interest.

Withdrawing Cash

Taking out a cash advance is most likely the costliest type of credit card transaction. Not only will you pay a higher interest rate on the amount you’ve withdrawn; the grace period for interest being charged with normal transactions is usually voided and an additional cash advance fee will normally be charged as well.

Purchasing Unnecessary items

This is another bad habit that should be stopped immediately because it results in you accumulating debt that you might not be able to repay at a later stage. 

If there are items you want, but cannot afford to pay for in full, it’s best to save up instead of placing these purchases on a credit card. You will feel a tremendous sense of satisfaction in knowing that you own the item from the start instead of only truly owning it after repaying your credit card balance.

Making Late Payments

These days, it’s possible to schedule payments so that they are sent to your credit card provider on time each month – meaning that there is literally no excuse for making late payments anymore. 

Late payments not only affect your credit score; over time, additional penalty fees and interest will be applied to your credit card as well. Again, this will result in you wasting money on unnecessary late payment fees. 

Exercising good credit card habits such as never carrying a balance until such time as interest is charged and ensuring that repayments are always made on time will go a long way in helping to build an excellent credit score – while allowing you to keep more of your hard earned cash because of not paying interest. 

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