When used responsibly, credit cards are a great way to earn rewards, build credit and extend your purchasing power.Unfortunately, the allure of over-spending can be strong, and many people find themselves in credit card debt.
Whether you’ve maxed out your Discover card or fallen behind on your Visa payments, it’s easy to get into trouble with a credit card. Fortunately, it’s possible to get out of debt. It won’t happen overnight, but applying these tips can help you regain control of your finances:
– Stop spending. This is an important first step; if you keep charging to your credit cards, you’ll never be able to pay them off. If you have to, cut up the cards or just lock them away in a drawer so you’re not tempted to use them.
– Pay off your high-interest accounts first. Even if an account doesn’t have a high balance, it’s often better to pay it off first if it has high interest rates. This will save you more money in the long term.
– After you pay off one credit card, increase your payments to the next. Don’t let yourself use the extra money on spending. Instead, immediately pour any money that you regularly spent on one card’s payment into paying off the next card. This will help pay it off more quickly. Once all of your cards are paid off, you can put all of the money you’d normally spend on debt into a savings account to start saving for your future.
– Consider consolidating your cards. Some companies offer credit cards with zero interest for the first six, 12 or 18 months. You can transfer the balance of one or more cards onto this single card and pay off your debt with no interest. Just be sure to pay it off before the introductory rate wears off, and keep an eye out for balance transfer fees or other hidden charges.
– Communicate with your credit card company. If you’re having a hard time paying your credit card bill, call the company to discuss your options. It’s better to ask them for help than to simply skip a payment. If your account goes into default, you might qualify for a fixed payment plan that will reduce your overall payment if you agree to pay a certain amount each month.
Consumer debt is scary. It can ruin credit and lead to financial strain. By taking the first steps to get your debt under control, you can manage your finances and start repairing your credit score.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.