U.S. consumers now owe close to $1 trillion on their credit cards. It’s incredibly easy to build up credit card debt, but it can be difficult to manage and reduce it once it’s built up. This is why it’s important to regularly take a close look at your personal finances to ensure you’re managing your money smartly.
Keep reading to find out how to manage and reduce your credit card debt.
Pay More Than Minimum
Your monthly minimum payment is literally the minimum repayments you need to make on your credit card debt. The amount usually depends on how much you owe.
Banks make money off the interest they charge. So if you can pay off your debt sooner, you’ll end up saving money in the long run.
You can decide how much more to pay each month depending on your personal budget. You don’t want to pay it all off in one fell swoop because you might not get any benefits from using your credit card then, but it’s definitely a good idea to pay more than the minimum.
The Snowball Method
If you have a lot of credit card debt and you don’t know how to tackle it, consider using the snowball method.
With this method, you first need to sit down and make a list of all your debts, ranking them by the amount you still owe. Once you have a list, focus on completely repaying the smallest amount as soon as possible. Then move on to the next smallest amount until you’ve paid off all your debt.
If this method means you can only make minimum payments on the rest of your debt, then that’s ok. As you start eliminating your smaller debts, you’ll have more money to put toward your other debts.
Control Your Spending
While you’re paying off your credit card debt, you need to ensure you don’t build any more along the way. Other than regular expenses that can’t be avoided, you need to limit your spending. If you don’t already have one, it’s a good idea to create a budget where you list all your expenses to see where you can save some money.
One way to do this is to open a savings account where you keep your money safe. After payday and paying for any necessities, you should only focus on paying off your debts. Using a savings account will help you be less tempted to spend the money immediately.
Manage Your Credit Card Debt
When it comes to credit card debt, you can’t just ignore it. One of the first lessons of money management is to stay on top of your credit card usage and only spend what you can afford to pay back. If you’ve already accumulated credit card debt, then you need to immediately start working to reduce it.
If you’re ready to start managing your credit card debt, contact us today. FiCare Federal Credit Union has physical branches in Clearwater, Lutz, and Tampa!