How to Stay Out of Credit Card Trouble for Good
Ah credit card—the slim, shiny plastic that makes everything suddenly affordable in just one swipe!
For those who want to avoid the hassle and risk of carrying wads of cash when shopping or dining, credit cards can be gifts from heaven. But for those who aren’t in the least bit in control of their spending, credit cards can be the bane of their existence and financial freedom. And because you’re here, we’re guessing your credit cards are about to be the latter.
Unmanaged credit card bills can haunt you for years if you don’t learn to attack them right. But there’s always a way out. Here, we offer a few tips on how you can deal with credit card debt and stay out of credit trouble for good!
- Assess the damage. Ignoring your credit card debt will not make things better, in fact it will only make the situation worse. Thus, resolve to confront your problem once and for all. Start by assessing and understanding your situation. Gather all your credit and bank statements, as well as ATM withdrawals. Try to determine what and where you may have overspent, and also check if there are any discrepancies with the reports.
- Freeze your credit cards. Closing down your accounts will only hurt your credit score, so why not freeze them instead? Yes, literally. Not using your credit cards and keeping them out of reach will at least stop the debt from accumulating. Leave them at home and use them for emergencies only.
- Prioritise. Paying off debt in one credit line is already challenging, more so if you have unpaid balances in multiple cards. If this is your situation, setting your priorities is a must. For instance, if your goal is to have one card totally paid off, then start with the one with the smallest balance. If you seek to pay less in interest, however, then it would be sensible to target the one with the highest interest fees first.
- Speak to your creditors. If you’ve been a loyal and a good-paying customer, there’s a possibility that your creditor may consider your financial situation and reduce interest rates and late fees. Thus, consider speaking to your credit card company and ask if there is anything they can do to help you.
- Pay more than the minimum credit card payment. While it may seem convenient paying only the minimum credit card payment, this actually costs you more in the long run. This is because the minimum payment usually covers only the interest rates and not the principal balance, which means you’ve still got a long way to go from clearing your dues. Paying more than the minimum, however, will help you settle the balance faster and save on interest charges.
- Avoid using your credit card for cash advances. If you’re strapped for cash and need to settle urgent payments or address minor emergencies, you might be tempted to use your credit card for a cash advance. But beware, you’ll only sink deeper into debt if you choose this service as credit card cash advances actually have much higher interest rates than purchase transactions.
If you need cash fast, consider obtaining fast cash loans or personal loans from reliable lenders instead. Unsecured personal loans from Money3 are perfect alternatives to payday loans and credit card cash advances as they require no collateral, have convenient and affordable repayments, and have relatively lower interest rates.
When used wisely and responsibly, credit cards can speed up transactions and make our credit scores look good. But if you’re not careful, this piece of plastic can cause your downward spiral. Hence, take charge of your financial situation, learn effective money management strategies, and get help from reputable financial institutions like Money3.