Credit card debt is more common than you may think. Nearly two-thirds of American cardholders carry some type of debt. While it may seem overwhelming at times, getting out of debt is achievable. The important thing to remember is that even though some actions can have a bigger impact on debt than others, any step towards a zero balance is a step in the right direction.
THE RESPONSIBLE ROAD
Pay a bit more
Paying more than the minimum can help you become debt free a lot faster and ultimately lessen the amount you owe.
Pay on time, every time
Regular payments help you work towards eliminating debt and show that you are responsible with credit.
Transfer your balance
Consider transferring your balance to a card with a lower APR. While the transfer will likely have a fee, you could get a low rate to help you save on interest in the long-term.
Watch your wallet
A little discipline can go a long way. Plan accordingly for big ticket items and stick to your budget for every day items. Remember, If you don’t need it, don’t buy it.
Contact your creditors
Before you get overwhelmed, talk with creditors. They can discuss how to get out of debt faster if you’re honest and forthcoming with them.
THE DEBT DITCH
Pay the bare minimum
The minimum amount makes your debt seem more manageable in the short term, but remember: the less you pay now, the longer it’ll take to pay the total amount.
Make late payments
Being late with payments will harm your credit score. Missing payments can lead to fees, penalties and even raise your interest rate.
Ignore the terms
Your rates may have increased and your card may be costing you a lot more than it should..
Shop till you drop
Max out your card and you may incur penalties, increase rates and damage your credit score.
Neglect your score
A bad credit score will increase the cost of things like home loans, insurance, apartment rentals and more..
DEBT IN REAL LIFE
Long Term Savings
Paying a bit more in the short term can create greater savings in the long run. Credit card statements show how long it may take you to pay off your balance, and how much you would need to pay if you wanted to pay the balance off in three years.
Based on a credit card with 13.99% APR and $5454.00 balance
Affecting your Credit Score
Your credit card behaviors have a significant impact on your credit score. A payment that’s 30 days late will be reflected in your credit report for seven years.
Find a card for you
Find a card that meets your needs and lifestyle. Some cards give you cash back on everyday things like gas and groceries while others can help you earn towards larger purchases such as travel and electronics.
Talk it out
If payments are out of control or you just feel overwhelmed, work with a credit counselor from the National Foundation for Credit Counseling. http://www.nfcc.org/
Make payments manageable
The National Foundation for Credit Counseling recommends that personal debt, excluding mortgage or rent, should not exceed 20% of your income on a monthly basis.