Burdened By Credit Card Debt? 5 Lifelines To Save Your Finances

Make the minimum payments on all your credit cards to avoid an extra late fee and to keep up a good credit score.
Burdened By Credit Card Debt? 5 Lifelines To Save Your Finances

Credit card debt could be a huge drain on finances and cause anxiety about its long-term effects on one’s financial stability. Here are five actionable steps that would break you out of the credit card debt’s vicious circle: 

Evaluate Your Finances:

First, you have to understand your financial position. You will need to get all the credit card and bank statements to evaluate your total debt, interest rates, and minimum payments. Also, make a list of all the sources of income and track monthly expenses. This accounting overview can help you target any areas where you can cut spending and save money.

Read More: RBI Modifies Credit Score Rules: Know More About It And Bust Credit Score Myths

Create a Targeted Budget:

Accounting properly is an essential step towards managing credit card debt. Keeping a record of income and expenses—including those minimum credit card payments—will help you keep tabs on your spending. Look for ways to trim discretionary spending on items like eating out or unused subscriptions. Use a large part of your discretionary budget to quicken debt repayment.

Prioritize Debt Repayment:

Make the minimum payments on all your credit cards to avoid an extra late fee and to keep up a good credit score. One may want to use the debt avalanche strategy—paying the highest-interest credit card first. This will help you save money from interest added over time. The debt snowball method, however, allows one to clinically focus on the smallest card balance first, for psychological victories and motivation.

Also Read: Can You Still Pay Your Rent Using Your Credit Card? Check These Guidelines

Negotiate with Credit Card Companies:

Most people don't even know they can call the credit card companies and negotiate. One asks for a lower interest rate, extension of due dates, or even help with hardship programs. The credit card companies, of course, if the economy is going down, will try to cooperate more. Such negotiations may pay off to a great extent and reduce the interest burden, hence making debt repayment quite easier.

Seek Professional Guidance:

If you are unable to control your credit card debt by yourself, consider the help of a certified credit counsellor. They will assess the situation, make a personalized plan for debt management, and negotiate on your behalf with the creditors. They also advise on budgeting and saving and lay a base for good habits to stay away from such traps in the future.

Related Stories

No stories found.
logo
Outlook Business & Money
business.outlookindia.com