The summer is nearing a close and the bills don’t stop rolling in. You had a very merry summer, but now you have to face the pile of credit card debt that you incurred. Where do you begin?
Make More than the Minimum Payment
You may have noticed a change in your credit card statement recently. Now when you receive it each month there is a federally mandated box on it that tells you how long it will take you to get out of debt. It comes in two sections.
Section #1 shows you how long it will take you to get out of credit card debt if you pay only the minimum amount due on your statement. Depending on how much you owe, that could well be 30 years – the amount of time for a typical home loan.
Section #2 shows what you’d have to pay per month to get out of credit card debt in just three years. That’s why you want to pay more than the minimum payment.
Pay Before You Play
If you really want to get out of credit card debt, be sure to pay the card off before using it again.
Yes, it might be difficult, especially given the economy. However, if you really want to regain control of your finances put the card away and don’t use it again until the balance is at zero.
Don’t Use Credit Cards for Cash
Easy money, sure. However, beware the hidden fees and higher interest rate charges. According toBankRate.com, if use credit cards to withdraw cash you will likely see:
- Upfront fees of two to four percent
- A higher interest rate than on regular charges
- No grace period, interest begins as soon as you receive the money
- Your monthly payments going to the balance with the lowest interest rate
Keep in mind, that as the holder of the card, you do have the right to ask the card company to apply your payment to a specific amount and some card companies will cooperate. If you are lucky, you can get them to payoff the higher rate first. However, you’re better off not using the card at all.