Credit cards offer you a lot of conveniences. You can pay regular monthly bills with them. You reap tons of frequent flyer miles if you use them a lot. Your credit score improves over time if you use them wisely. However, the reality is many people just aren’t managing their credit card debt very well, which cuts into the benefits that they do get from using their cards. If you count yourself among those who’d like to have more control over your credit card bills, then here are three tips for helping you make that happen.
1. Know how Much you Owe
According to Nerd Wallet, most Americans have more than 15 grand in credit card debt. It’s probably safe to also say that most people who accumulate that much debt don’t mean to do so. That’s one of the most common things that Second City Advisors hear: that a client’s credit card debt just caught up to them.
That being said, the only way out of credit card debt is to first know how much you owe. If you don’t know what you owe, how much the minimum monthly payments are, etc., then you’ll find it hard to manage your debt. If your credit card debt snuck up on you, then it means that you weren’t keeping track of how much you were spending on your card/s.
It’s okay. It happens to a lot of people who have credit cards. Instead of beating yourself up, just make a point to learn how much the balance is on each of your cards.
2. Don’t Just Pay the Minimum Payment
Paying the monthly payment on your credit card bills keeps you out of hot water with your credit card company. However, if you only pay the minimum payment, then you’re paying a lot of money in interest to the credit card company. Even a small amount of interest can add up, according to the Motley Fool website.
Ideally, you pay off the entire balance on your credit cards each month. That prevents you from having to pay tons of interest. It also allows you to continue getting your credit card benefits, like frequent flyer miles without getting dinged by extra interest charges.
3. Use a Debt-Reduction Strategy
When someone works with us at Second City Advisors, we try to help them develop a debt-reduction strategy. This might mean encouraging them to do a Debt Snowball. (This is a plan where you pay off the smallest loan or credit card amount first, working your way up to the biggest until all of your debts get paid off.) It may also mean that you consolidate your debt so that your high-interest rates go away and you just have one payment a month.
Whatever strategy you use, you need to make sure it’s one you can stick to. Doing this consistently allows you to eventually manage your credit card usage successfully.
Take Aways
Getting a handle on your credit card debt ensures that your credit card use remains manageable. Knowing how much you owe, paying more than the minimum payment, and using a debt-reduction strategy are just some of the ways you can get ahead of your credit card debt. Using all of the strategies in tandem gives you the most control over your card debt