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Tags: finance, debt management, control credit card debt
 Cards with the VISA or MASTERCARD logos are ever-present nowadays that we take them for granted. They have become a part of our lives that it’s hard to imagine life without the ease and convenience they afford. For many consumers, however, they also carry a downside—it’s easier for us to overspend and incur a lot of credit card debt.
This debt hangs over your head like the Sword of Damocles, although in this case it’s not a sword but the credit card rates that can go as high as 18% compounded monthly. With the current economic downturn you need to be able to not add to your debts. Thus, you need to control credit card debt by controlling credit card spending.
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The overspending problem doesn’t really have much to do with your VISA or MASTERCARD, but with how you actually use them. For most of us, using plastics is already a hard habit to break and it is difficult to stop cold turkey. However, there are ways to slowly wean yourself off of your dependency on them.
The most important thing is to understand why you spend. Most of the time your out of control credit card spending has to do with your emotions. Take a long, deep, and hard look at yourself and the motivations for your spending. If you are able to look at yourself rationally you may be able to stop yourself from saying those two dreaded words—“charge it.” Budget your money and stick with it.
It’s only when you have no more money that you revert to using the plastic. Budgeting will help you understand where your money is going so you could plan your spending without having to use your cards. Pay off your credit card balance as much as possible. Try and pay off all the balance each month.
However, if you are not able to pay it all off, at least break your habit of paying off only the minimum required payment each month. Not only does it prolong the time before you pay off your debts it’s also advantageous for the banks since the longer it takes you to repay the charges, the more interest they can charge you, resulting in less cash left over for you to use which in turn will have you resort to charging it to your cards.
It’s a vicious cycle that you need to break. Increase your monthly credit card payments beyond what is required—double the monthly minimum if you can, but anything over will help take care of the principal amount so you pay less in interest the next month. You can do pinpoint attacks on just one of your cards simply by just paying the minimum on your other cards and focusing all your repayment resources to the one with the highest rates so you can pay it off quickly.
After you’re done with one, you can move on to the next one down the line and so on and so forth. You can also balance transfers from a high interest to a low interest rate credit card that you own or to one that has a low introductory interest rate offer.
However, check how much the regular rate is after the introductory period because you may wind up paying more than before you transferred. Also, be careful of transferring balances because banks may retroactively charge you the full interest rate if they see you are interest rate hopping. Finally, you can get a consolidation loan to pay the balances.
You can use your home’s equity. The advantage is that you’re only paying off one monthly amount and the interest will be lower than what you were carrying in your cards. You can also use you savings to pay off all your credit card debts—no amount of investment can equal the 18% interest that credit cards charge you.
Controlling your debts just takes discipline.
About the author
The author of this article Rick Goldfeller is a successful underground Financial Analyst who has been advising and coaching individuals for many years. Rick recently published a book on how to manage your money and attract Wealth and Financial Freedom. More info on his Finance Planning course is available HERE.
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