Credit card debt. Most of us cringe when we hear that phrase, but did you know that not all debt is bad debt? Plus, paying with a card is less risky than cash, and it’s easier to track. Not to mention the rewards you can get!
As long as you are responsible with your spending, a credit card can be a great way to build credit. If you avoid those impulse and convenience buys, it can be a great tool to use. Take a hammer for example, it’s a great tool, but when used incorrectly it can lead to a sore thumb.
So, what happens if you made that mistake and took that trip you probably shouldn’t have? Or maybe you had an unexpected large medical bill. Whether it was avoidable or not, you still have a credit card bill at the end. So, what is the best way to hammer away at that bill?
Know What You Owe
This might be the most painful of the steps. It’s easy not to worry about your debt or see how bad it is if you avoid looking it straight in the eye. Gather some courage and rip that band-aid off. Once you know exactly what you owe, it’s a lot easier to make a game plan.
Check Your Fees
Go through each of your credit card accounts (if you have more than one) and make a priority list. Those with the highest fees and interest should go first, however, depending on your situation it may be easier to go for the smallest balance first. Even if you only have one account, it will help to know exactly how much of your payment is simply going to interest.
Incorporate Other Financial Products
Figure out what works for you. Debt consolidation loans can be great if your cards have a lot of fees and high interest rates. You can also look at a balance transfer to a new card. Make sure to read the fine print, as those that have no interest rate may have a transfer fee or the interest may still hit the account if you don’t pay it off before the promotional period ends. On the opposite end, some may not have a transfer fee but still a low interest rate. You can also use our new Debt Eraser Quiz to help you figure out which is best for you.
With inflation, the pandemic, and jobs being in-flux, there are all kinds of reasons that you may not be able to pay off your debt right now. That is completely and totally OK. If you are just getting by paycheck to paycheck, you are not alone. The main goal here is to stabilize so when you do find yourself in a better financial position (which we know you will, you rock star), you will be ready to go.
First, just focus on making your minimum payments and staying current. You won’t be making much of a dent while fighting interest, but this will protect your credit score. In addition, avoid impulse buys. If you see something you really, really want, just take a minute. Do you really need it or is more of a want? Finally, if stopping yourself from these types of purchases isn’t your strong point, take the choice away completely. Leave those cards at home and hide them. Don’t forget to delete them out of your mobile wallet. You can’t use them if you don’t have them with you!
Don’t forget to stay positive. Your journey is yours alone and everyone’s looks different. No matter your path, you got this. If you need help navigating, we are here to help. Fill out the form below to be contacted by one of our moveUP Financial Wellness Specialists. They can help you put a plan together.
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