Four ways to get your credit card debt under control.

Is debt consolidation the answer?

Americans love their credit cards. In fact, the average U.S. household has about $7,400 in credit card debt. Your mail is probably full of offers from banks tempting you to take advantage of another card. Things can get out of control quickly and missed payments can affect your credit score.

Some of the best tips for keeping credit card debt under control may seem like common sense, but they’re worth repeating.

Our lives are hectic. It’s easy to lose track of the date your bills are due. Staying organized and aware of the pitfalls can save you thousands in the long run. Debt consolidation can also be an option.

Four simple tips for the big payoff.

1. Know your interest rate.

The trouble with credit cards is that they are so easy to use, it sometimes feels like you’re making purchases for free. Unfortunately, they are not so easy to pay off, especially if your interest rate is variable, changing over time. It may be best to pay off a variable-rate credit card with a fixed-rate personal loan you can rely on. Your monthly payments stay the same, so it’s easier to plan your budget. 

Some credit cards entice you with 0% initial interest periods. These cards can be very useful for purchasing a high-ticket item that you can afford to pay off during this initial period. They can even be used to transfer balances from other credit cards that you can pay down without interest prior to the expiration of the introductory period. But beware. 

Look at the fine print to see exactly when this interest-free period ends and when the new interest rate (usually high) begins. 

Credit unions can often offer better interest rates than banks or other lending institutions, so don’t overlook this option as you shop for credit. 

Quick cash or payday loans can be a dangerous option as interest on these loans is very high. 

2. Keep a payment Calendar.

Whatever you do, don’t miss a payment. This can quickly lower your credit score. Should you miss one payment, it is worth a call to the credit card company to ask forgiveness and have your late fee removed. Late fees are expensive, and when added to your balance, you will then be paying interest on the amount. 

Keep payment dates on your monthly calendar and set reminders on your phone or laptop. Life is hectic. With all you have to do each day, it’s easy to forget the date. If you’re paying your bills through the mail, be sure to do this at least a week ahead of the due date. 

3. Don’t fall prey to minimum payments.

Sure, it sounds good to only make the minimum payment on your credit card. But, if you never pay more than the minimum, your payments could go on for years, even decades. Take time to investigate how long it will take to pay off your balance at the minimum rate. 

Ideally, you want to pay off your balance every month, but life happens. If you’re between jobs, have some unforeseen expenses, or just overspent, then paying just the minimum can help to get you through to the next month. 

But remember to pay that minimum on time. Late payments can be very unforgiving. They affect your credit score, as can only paying the minimum over a long period of time. This indicates to creditors that you have a hard time covering debts. 

4. Simplify payments and reduce interest with debt consolidation. 

If you have multiple credit cards with high balances at high interest, then you should consider consolidating the entire amount into a personal loan. Make sure the loan you choose is offered at the lowest rate of interest you can find. It may be lower than what you are currently paying to make the consolidation worth the switch.  Even if the rate remains the same, there are benefits to consolidating bills into one payment.

Once you have your new loan, be sure to make your payments on time. It should be much easier to keep track of one payment, rather than multiple due dates. However, late or missed payments on debt consolidation loans can lead to legal action and a negative impact on your credit report. 

You may see advertising for credit counseling services. The use of these services may have a negative impact on your credit score as it signals future creditors that you have difficulty with debt management. But credit counseling is far better than falling into bankruptcy, so look for a reputable credit counselor to avoid declaring bankruptcy. Reputable credit counseling agencies will never ask for upfront fees.

The information and materials provided on this website are intended for informational purposes only, and should not be treated an offer or solicitation of credit or any other product or service of Regional Finance or any other company. This website may contain links to websites controlled or offered by third parties. We have not reviewed all of the third party sites linked to this website and are not responsible for the content, products, privacy policy, security, or practices of any linked third party website. The inclusion of any third party link does not imply any endorsement by Regional Finance of the linked third party, its website, or its product or services. Use of any third party website is at your own risk.