Skip to main content

Reduce debt stress by becoming credit card-savvy




Using credit cards can be a helpful way to manage finances. Yet incurring mounting debt from high interest rates with high finance charges, especially on multiple cards, is extremely distressing. Here are tips to help reduce your existing credit card debt and things to know before signing up for another card.


  • Tally the credit card debt you have. Write down the balances, minimum payments and interest rates for each card. Then rank them from highest to lowest interest rate, regardless of balance. 
  • Aim to pay off the card with the card with the highest rate first. Then move on to pay off the card with the next highest rate and so on. This will save you money over time, keeping your interest rate in check.
  • Or, you can pay off the card with the lowest balance first, then proceed to the card with the next lowest and so on. Though a more expensive route, this strategy can be the fastest way to reduce debt on individual cards and boost your confidence to pay off cards.
  • Put any extra money plus the minimum monthly payment toward the card you're paying off first.
  • Continue to pay the minimum monthly payments on all your other cards.
  • Don't make any new purchases on the card you're paying off
  • Repeat the above steps until all your credit cards are paid off.
Remember, pay your balances on time to avoid paying late payment fees!
Each of your credit card balances directly affects your credit score, which measures your creditworthiness (how likely you are to pay back a debt, based on your credit history). Late and missed payments can lower your score, making it difficult to for you to borrow money for a mortgage or car, for example - you'll pay more for the money you're able to borrow. On the other hand, the longer your credit history and consistency of payment, the better your score. 

Have debt on multiple cards? Consider debt consolidation. Rolling your various debts into one monthly payment can help simplify or lower your payments. Before you consolidate, talk to a qualified credit counselor. 

Before signing up for a credit card...

Know the APR (the annual percentage rate) of the cards. This is the interest rate (fee the lender charges). The higher the interest rate, the higher your finance charges each month (the dollar fee charged for paying over time instead of all at once). When you're trying to pay off your debt, higher interest rates hurt you because much of your payment goes toward the finance charge.

Use an online calculator to determine the true cost of paying off the card with interest. If you're unable to pay the balance on your card each month, you can end up paying more for your purchases due to interest rates. Look for a calculator to discover the cost of paying only the minimum each month.

Need help to dig out of debt? Visit the Federal Trade Commission at www.consumer.ftc.gov/articles/0145-setting-credit-card-debt

Or the U.S. government information services: https://www.usa.gov/debt

Comments

Post a Comment

Popular posts from this blog

Everything You Need to Know About Inheriting Money

While inheriting money, property, and other assets can bring about positive changes for your household, handling an inheritance can be difficult as you'll almost certainly be dealing with a loss at the same time. One important piece of advice -- take time to process the loss before making big lifestyle or financial choices. However, don't wait to understand the tax implications or hire professionals to help. Then, once you're ready, you can implement your plan for using the money. Many People Don't Pay Taxes On Inheritance As the recipient, you won't have to pay any federal income or estate taxes on an inheritance. About 55% of inheritance are less than $50,000 according to the Federal Reserve, with an additional 30% being in the $50,000 to $249,000 range. Estate taxes can be imposed on the decreased's estate, but that happens before you receive your portion of the inheritance. Even then, there's an $11.2 million exclusion for federal estate taxes, and most ...
Post a Comment
Read more

How to Stay Safe When Shopping Online

There was a time when shopping from home was the height of convenience and luxury. Eventually, the idea of just picking up your phone and buying a tub of laundry detergent was so commonplace it hardly seemed notable.  And of course, nowadays making purchases online isn't entirely about convenience. If you're looking to limit face-to-face contact and reduce your potential exposure to contagious diseases, online shopping can certainly help.  But shopping online does create an entirely different set of risks - risks to your identity and your financial security. The basics of safe online shopping have remained fairly consistent in the past decade-plus, but it's always a good idea to refresh yourself and ensure that you're following all the best practices. If you're making purchases online, make sure you're taking these steps every time.  Keep Your Device And Your Browser Up-To-Date Malware is constantly evolving. To stay ahead of the curve, software developers are c...
Post a Comment
Read more

What Are The Best No Annual Fee Travel Rewards Cards?

Do you refuse to pay an annual fee of $95 or more for a credit card? No problem - you can still earn fantastic travel rewards with these cards that, in some cases, can be worth more than cash back.  Everyone loves the idea of travel hacking their way across the globe. Trouble is, many of the best travel rewards credit cards have annual fees of $95 or more, and most don't love the idea of paying an annual fee to earn "free" travel. Fortunately, there are plenty of good no annual fee travel rewards credit cards. These cards are perfect if you want to pocket points toward a free vacation but don't spend enough - or don't want to spend enough - on your cards justify an annual fee. In some cases, you might just be against the idea of paying an annual fee on principle. Either way, consider those top travel reward cards that do not charge an annual fee. Best no annual fee travel rewards credit cards BankAmericard Travel Rewards Credit Card Card...
Post a Comment
Read more