You opened up your latest credit card bill, and your heart stopped for a second. How could you have spent so much money without realizing it? And how are you ever going to pay it all back in time? Follow these simple tips to clear that debt and get that balance down to zero.
Start Credit Counselling
If you’re in deep financial trouble, you should seek out a licensed insolvency trustee for professional help. They offer credit counselling services that can give you the essential tools to erase your debts and restore your personal finances. Depending on the seriousness of your situation, they can also advise you about consumer proposal services and division 1 proposals — these are alternative options to bankruptcy.
Prioritize Your Cards
If you’ve spread your debt over several credit cards, you’re going to have to be strategic about paying them all down. The smartest move that you can make is to pay the card with the highest interest rate first and then concentrate on the lower-interest ones after that. Leaving a high-interest card alone will only make your debt grow.
Make Your Payments
You should get in the habit of making credit card payments by the deadlines. This way, you won’t acquire late fees or penalties. Anyone afraid that they’ll forget the date can automate their payments through online banking or use personal finance apps to send them reminders about upcoming due dates.
Do More Than the Minimum
If you make the minimum credit card payment every time that you get your bill, you will likely spend years chipping away at your debt. For instance, say you have a card with 20% interest and a $1000 balance sitting on it. It would take 25 years to recover from the debt if you only did the 2% minimum payments.
There might be times when all you can offer is the minimum. In that case, you should give the minimum amount — it’s better than putting down nothing. For the next month, you can make certain lifestyle changes so that you can collect more savings to put on your credit card.
Use Credit Only When You Have To
Sometimes your credit card is your best payment option, and sometimes it should be your last resort. For instance, everyday things like groceries and toiletries should be paid for with debit or cash. These purchases are small enough that your cash/debit can cover the costs. Plus, you aren’t adding more debt to pay off later.
Here are some other times that you should put the card away:
- When you’re hungry
- When you’re intoxicated
- When you’re upset
- When the card is close to the limit
You’re not the only one who is dealing with this problem. The Financial Post reported that the entire country racked up a record of $100 billion in credit card debt last year. So, your struggle with paying off your cards isn’t out of the ordinary.
Clearing your credit debt might sound like an impossible goal, but you can do it. As long as you follow these straightforward tips, you should hit the target and wipe away that outstanding balance in no-time.