Do you think youre avoiding the debt trap by keeping a close eye on your credit card usage? Unfortunately, just watching what you spend is never enough. You need a system that can help make your debt more manageable and allow you to break free from the disastrous cycle that debt can leave you stuck inside of.
Of course, taking a systematic approach to your debt isnt always easy. Thats when it makes sense to start off slow, rather than try to tackle it all at full speed. Thankfully, you can strengthen your financial habits by adopting a few easy tricks that will help you finally get everything under control.
With that said, take a look below to learn about 4 simple and easy methods that will help you keep your credit card debt at bay. Adopt these techniques now and you will always be one step ahead of the game!
#1 Only Charge What You Can Afford to Pay Off Monthly
Some people see credit as a way to purchase things they normally could not. They become attracted to the idea of making several payments over the course of time, only to completely forget about interest charges that will occur. Eventually, they realize theyre paying considerably more for something that has already dropped in value. Not exactly the best financial move, is it?
The only way to keep your credit card debt under control is to have none at all. That means anything that is charged to your card should be paid off within the same monthly billing cycle. This helps you avoid any interest charges, allowing you to get what you want now without paying extra for it later. It will also prevent your balance from getting out of control.
#2 Automate Your Payments
Have you been cutting it close with your credit card payments lately? Automating your payments can help reduce the chances of you forgetting to make a payment or paying too late. The process is simple to setup and is worth doing for anyone who has trouble remembering to send in their payment on time.
To setup your automated payment plan, you first need to attach your bank account to your credit card account. After that, select a monthly payment date that works best for you and set the amount you wish to pay each month. Thats all there is to it!
Putting your payments on autopilot can help you stick to a debt reduction plan and help you avoid any potential late fees. That alone makes it worth the small amount of effort to set it up.
#3 Keep a Limited Amount of Cards
The easiest way for your credit card debt to spiral out of control is through the use of several credit cards. Spreading out your usage might seem smart at first, but it eventually becomes difficult to keep track of. It only brings you closer to the debt ceiling, putting a significant amount of weight on your shoulders for you to carry.
If you want to reduce your stress and overall debt load, you need to eliminate a few credit cards from your arsenal. Pay down the balances and close the cards that you dont need (i.e. retail store credit cards). You should also make sure you keep your oldest lines of credit open, only closing accounts that are new or recent. This allows you to reduce your debt without it potentially lowering your credit score.
#4 Cut Back Card Usage to Keep Utilization Below 30%
Are you hitting the limits on every credit card you carry? If so, the road to freedom might be a long haul. That doesnt mean it cant be done, but its going to take a lot of work, dedication and a little self-control on your part to change things up.
To get your credit card debt back to a level that is manageable, you need to focus on lowering your utilization ratio to 30% or lower. That means if you have a credit card with a limit of $1,000.00, your balance should never exceed $300.00 at any given time.
Lowering your utilization comes with another benefit: a better credit score! So, not only do you help reduce your debt, but your score will increase as a result. It doesnt get much better than that!
Sam Jones, the author, has been looking at bad debt credit card options on uswitch to see if you can get better options without running into too much additional risk when trying to manage credit card problems.
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