Credit cards truly bring ease and convenience to cardholders – they are safer to carry around and a quick way to make payments. Nevertheless, there are risks that come along with the advantages. The number #1 cause for bankruptcy is excessive credit card debt. It is no secret that uncontrolled credit card use can result to trouble.
Getting Your Credit Card Debt Under Control
Create A Budget
If you create a monthly budget, you will know EXACTLY how much disposable income you have. Always keep that number in mind. Some of my clients have not just created monthly budgets but they have broken it down to how much money they have PER WEEK to spend. And even some that go that one step further and calculate how much they can safely spend PER DAY.
When creating your budget be realistic. You need to make sure you have the money available for your essential bills like rent, electricity, food. And of course your somewhat luxury items of internet and cable. Some people consider these essential, but they aren’t. And giving them up for a few months may help you get out of debt faster. Also, when you create your budget its essential that you put something away in savings. If you are not putting away something monthly in your savings, you are setting yourself up for financial disaster where you will be forced to turn to your credit cards for emergency funds.
Use your card only when its necessary
Shopping with a credit card may lead to “impulse buying” and overspending. Thus, it is recommended that before charging anything to your card, you need to make sure that you can pay back your purchases on time.
Your goal should be to be able to pay OFF your card at the end of the month. If you are only paying off the minimum balances each month, then you are falling deeper and deeper in debt.
Frequently check your credit card statement online.
Make sure you keep an eye on your credit card spending by checking your statement online weekly. Sometimes if we aren’t following a budget plan, we may be overspending on little items. Just looking at how much you have spent has helped some of my clients put a halt to their impulse buying habits. Also constantly monitoring your account will also make you more aware of how you are spending your money. When my husband and iI did this a few years ago I was really shocked to see how much money we spent eating out. And not a nice fancy restaurants. It was little things. A $4 sandwich here and there. Starbucks. And if you are at Starbucks you don’t just get your coffee or tea. Cut that kind of spending out, and put it into your savings account instead!
Also keep an eye out for unauthorized charges. Most credit card companies will turn off the card if its being used in a way that is different than normal. But you still want to monitor that and alert your credit card company when you see errors.
Use no more than 30% of your credit limit.
Even if your credit card offers a low rate, it is not advisable to maximize your credit limit. Financial experts suggest not using more than 30% of your credit line to reduce the risk of bad debt and damaged credit.
Pay your bill on time.
Some banks will send you a statement 2 weeks before its due. Thats not enough time for most people to turn around and mail it back. Once you know what your due date is, set up an online payment for it. Make sure it will get there a few days BEFORE your due date just to make sure it gets processed on time and that you don’t have to call them monthly and fight over late charges.
