The season of giving is over — well, sort of. For many people, December’s gift-giving and feasting means a bigger-than-usual credit card bill in January. You know the advice: it’s always good to pay off your balance in full. But if you can’t, we’ve got some tips for paying down credit card debt:
Take stock. How much do you owe on credit card bills? Can you pay more than the minimum payment? On all of them? The more you pay off each month, the less you’ll pay in interest over time. Many credit cards have high interest rates. Making only the minimum payment can double or triple the cost of a small purchase as you pay it off over the course of months, or even years.
In too deep? The realities of debt can be hard to deal with, but it’s important that you take immediate control of your situation. Ask yourself “Will I be able to make ends meet AND pay my credit card bills this month?” If the answer is no, call your creditors ASAP; they may be able to place you on a payment plan, making your debt easier to manage. You may have also heard of debt settlement or debt management plans — these plans aren’t for everyone. Dealing directly with your creditors will often be your best bet.
Plan for future spending. Creating a budget and cutting out unnecessary spending are two fairly simple ways to better your financial situation. The FTC has a budget worksheet to help you get started. Determine how much you can afford to pay towards your credit card bills each month. Pay as much as you can, as soon as you can. Once you’ve eliminated your outstanding debt, continue budgeting to stay debt free.
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