Credit cards: a blessing and a curse. While most people have credit card debt, very few us take the time to learn the best strategies for surmounting that hill of debt prior to it becoming a mountain. Has yours become a mountain? The fact that you’ve made your way to this very blog suggests that it might have, which, as you are no doubt aware, isn’t the best news in the world.
But we do have some good news for you: you’ve taken the first step toward getting out of credit card debt by making your way to this blog in the first place. While it might seem insignificant when staring at the prospect of tackling your debt in general, believe us when we say that coming to terms with the fact that there is a financial problem really is the most important step. Now, the rest of your journey won’t be easy, by any means, but it’s key to realize that admitting there is a precarious situation is essentially stopping the bleeding.
That is, of course, unless you read today’s blog, forget about your financial worries completely, and then carry on with your current lifestyle. We aren’t in the blame game by any means, but if there are habits and choices you’ve made to get yourself here, it’s very important to identify those things and then do something about it. Far too often, people know there is something wrong, but it’s just too painful to stare head-on, so we put it out of our minds because it’s the easy route.
Again, you’ve made it this far, so props! Today’s blog is all about helping our readers both understand and do something about credit card interest and debt. After that, we’ll briefly highlight who we are at Your Loan Depot and how we can help with your immediate, emergency financial needs at any one of our ten payday lending locations throughout Texas.
Let’s start with the fundamentals here. One of the most common reasons people sign up for credit cards is because you don’t have to come up with the money for your purchase — at least not right away. This is a dangerous precedent, as anything that brings immediate gratification with costs later on down the road should be examined closely.
Another reason people sign up for (numerous) credit cards is because they offer rewards. It might be a $100 cash prize, cash back, frequent flyer miles, or an attractive interest rate.
However, if you tend to leave a balance on your account, which many people do, you’ll have a hard time paying off said balance. Why? It’s due to a little thing called interest. Credit card interest is perhaps the worst of all because it makes it extremely difficult to gain any ground on chipping away at that debt. This is why credit card debt reached $4 trillion in 2018, according to CNBC. By the end of March 2018, Americans were paying upwards of $104 billion in interest and fees. This is because the average interest rate on credit cards was an average of 14 percent, while some can be as high as 30 percent, according to the Federal Reserve.
So, the long and the short of it is that credit card debt can become a slippery slope if you don’t take care of it right away. If your balance is in the thousands, and you are living paycheck to paycheck, you are going to find it very difficult to make any kind of difference without putting a sound financial plan in place.
Now, we aren’t going to dive into the nitty gritty of APR, variable interest rates, how interest is calculated, or anything quite like that, because we’d rather talk about the solution than the problem. So let’s discuss how you can pay off your credit card debt by implementing a few steps. These steps are easy to understand, basic to implement, but can be challenging to stay consistent on. But you are capable! Let’s get going.
- Owing is okay, repaying is not – At the risk of painting with far too broad of a brush, we’ll speak in generalities. There’s a key distinction to make; making purchases with credit cards is not an inherent evil, it’s when interest compounds and payments increase that leaves you fighting an uphill battle. The important thing to remember is that, despite the fact that you don’t need to immediately pay off your credit card purchases, you need to be able to do so within a reasonable timeframe. Otherwise, you’ll end up overcharging, and that’s a vicious circle you want no part in.
- Understand that debt impacts your credit score – Not only is it vital to remain as debt-free as possible for the sake of your bank account’s current bottom line, but racking up credit card debt is a sure-fire way to watch your credit card score tank like nobody’s business. According to credcards.com, you should maintain an account balance under 30 percent of your available credit limit. You should also be sure to be timely with your payments, as any delinquency past 60 days is sure to be reported to the three main credit reporting bureaus: Equifax, Experian, and TransUnion.
- Use the “snowball method” – If you are familiar with our blogs, you probably already know that we are big, big Dave Ramsey fans. To the uninitiated, Mr. Ramsey is a financial sage most often heard on the radio dispensing pearls of budgetary wisdom to folks who call in seeking his advice. For our purposes, Ramsey promulgated (and likely coined) the snowball method, which involves attacking your credit card debt like mad. Not only do you have to be an animal about it, but you also need to be intelligent; specifically, go after the credit card payments with the highest interest rates. After you attack those to the point where they are vanquished, redistribute those funds toward the payments with the next highest interest rates, creating a . . . you guessed it! — snowball effect.
- Ask for help – No, we aren’t telling you to hit up your friends and family for some loose change (although, if your situation is sufficiently dire, it might be worth considering), we are suggesting you ask for help directly from your credit card company. To be clear, they have no legal obligation to accept less than the minimum required payment, but according to Lita Epstein, the author of “The Complete Idiot’s Guide to Improving Your Credit Score,” it’s worth a shot. “Try to work with your credit card company to work out payment agreements,” says Lita. “If that’s unsuccessful, work with a credit counselor from the National Foundation for Credit Counseling to come up with a repayment plan.”
Reach Out To Your Loan Depot
There’s a lot left to say about getting out of credit card debt. But we only have so much time in one day, so we will have to leave it there for now. If you are in need of more financial advice, comb through some of our prior blogs and you’ll be sure to find a few pearls in there!
For our part at Your Loan Depot, your Texas payday lending company of choice, we are here to address your immediate financial needs. If you’ve exhausted your resources by trying to get a loan at a bank or credit union — only to be denied — Your Loan Depot offers payday loans, bad credit loans, installment loans, and car title loans. With an efficient, understandable loan application process, our customer service representatives will make sure you understand the fine print so that you can make the best financial decision for you and yours. Give us a call if you have any questions, or apply online at your convenience! We’d love to hear from you and make sure you are set up for financial success in the short- and long-term!