Getting a handle on your credit

If you’re dealing with debt, it can feel overwhelming, but you’re certainly not alone. Across the United States, credit card balances have soared, reaching a staggering $1.13 trillion by the end of 2023. For many households, this means an average revolving credit card debt of $7,876 per household.

Whether you’re facing mounting bills or struggling to keep up with payments, there are steps you can take to get control of your finances. Paying off credit card debt means you’ll need to take proactive steps – but you can do it.

Here’s a guide to help you manage your debt and work toward your financial goals.

The post is developed in partnership with BetterHelp. 

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Find Your Payment Strategy

Having a clear plan in place can make a world of difference when it comes to efficiently paying off credit card debt. Here are a few strategies to consider:

  • Pay more than minimums: While credit card issuers set a minimum monthly payment, paying only this amount can keep you trapped in debt for years. Aim to pay more than the minimum to chip away at your balance faster and reduce the amount of interest you’ll ultimately pay.
  • Debt snowball: This method involves prioritising your debts by amount and focusing on paying off the smallest balance first. As you eliminate each debt, you roll the payment into the next one, gradually accelerating your progress.
  • Debt avalanche: Similar to the snowball approach, the avalanche method prioritises debts based on interest rates. Start by paying off the debt with the highest interest rate, then move on to the next highest, which saves you money in the long run.
  • Automate payments: Setting up automatic payments can ensure you never miss a due date, avoiding late fees and protecting your credit score. Just be sure to monitor your accounts to make sure payments align with your chosen repayment strategy.

Explore Debt Consolidation

If juggling multiple debts feels overwhelming, debt consolidation could provide relief. Here are two common methods:

  • 0% Balance transfer credit card: By transferring your existing credit card balances to a card with a 0% introductory APR period, you can avoid accruing interest for a set period, allowing you to focus on paying down the principal balance.
  • Personal loans: Taking out a personal loan at a lower interest rate than your credit cards can streamline your payments and potentially save you money on interest over time.

Communicate with Creditors

Don’t hesitate to reach out to your creditors and discuss your situation. Many lenders offer hardship programs or may be willing to negotiate more favorable terms, such as lower interest rates or waived fees. Exploring these options could make your debt more manageable and reduce financial strain.

Explore Debt Relief Options

If your debt feels insurmountable, there are formal debt relief options to consider, like the ones below:

  • Debt management plan: Through a nonprofit credit counselling agency, you can negotiate new terms with your creditors and consolidate your debts into a single monthly payment.
  • Bankruptcy: While it’s a serious step, filing for bankruptcy can give you a fresh start by wiping out unsecured debts or restructuring them into a manageable payment plan.
  • Debt settlement: This involves negotiating with creditors to settle debts for less than the amount owed, typically with the help of a debt settlement company. However, it’s essential to understand the risks and potential impact on your credit.

Seek Guidance from a Credit Counsellor

If you’re feeling lost in a sea of bills, consider reaching out to a credit counsellor for help. These professionals can offer advice on managing your money and debt, along with helping you creating a budget that makes sense for your financial situation. Credit counsellors are typically associated with nonprofit organisations, so their services are often free or available at a low cost.

Learn more about the benefits of credit counselling:

Taking Charge of Your Financial Future

While paying off credit card debt can feel daunting, taking proactive steps and exploring your options can set you on the path to financial freedom. By implementing a strategic repayment plan, exploring debt consolidation options, and seeking help from experts, you can take back control of your finances and work toward a debt-free future.

Remember, small changes can lead to significant progress, and every step you take brings you closer to your goal of financial stability.

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