Credit cards are a helpful tool when used carefully. However, if your credit cards are maxed out and payments are straining your budget, it may be time to seek credit card debt help.
Here are four things you can do today to get your credit under control:
Make a Plan
A debt reduction plan is the perfect starting point. Start by determining how much you owe and how much your payments add up to each month. Examine your budget and adjust your spending to make cash available for debt elimination. Take extra time to analyze your spending habits. Trips to the ATM, overspending on groceries or other necessities, and too many shopping trips can sabotage the healthiest budget. Once you know where your money is going and when it’s coming in, set realistic credit card payoff goals. Add “debt reduction” to your new budget and redirect spending so that you can reach your goals. You can also use online debt reduction calculators to set deadlines and make a timetable.
Nix New Debt
While you work to pay off credit card debt, it’s best to stop using your cards. It can be hard to stash credit cards that have been your go-to source of extra cash, but putting them away speeds up the payoff process.
Here are some creative ways to keep your cards out of service:
- Fill a small bowl with water, drop your cards in, and freeze them.
- Delete credit card numbers from online shopping sites.
- Remove your cards from your purse or wallet.
- Cover the magnetic strip with duct tape.
If these tricks won’t keep you from using your cards, think about cutting them up. You can always ask for new ones when your credit cards are paid off.
Avoid the Minimum Payment Trap
There’s a reason many credit card companies put a low payment warning on your statement each month. The high interest rates associated with most cards, multiplied by the time it takes to pay off your balance, equals a huge interest charge. For example, if you have a credit card with a balance of $3,000 and a 21% interest rate, by making the minimum payment of $60 each month it will take you a little over 10 years to pay off your balance. During this time, you’ll end up paying approximately $7,200.00 in interest charges.
If you’re curious about how much your cards are costing you, search for payoff calculators on the internet. Adding just $5 to your minimum payment can save you money and time.
Get Professional Help if Needed
Juggling credit card payments, missing payments, and using one credit card to pay another are signs that you need credit card debt help. Don’t wait to seek professional advice—by acting quickly you can avoid damage to your credit rating and start working on a plan to get your debt under control.
A bankruptcy trustee can be a good advisor if your debts have become unmanageable. Trustees can help you determine which solution is the best fit for your situation. They can also refer you to other financial advisors who can help.
Kim Powell, Client Services Manager, LCTaylor Trustees in Bankruptcy
www.lctaylor.com
