3 Essential Tips to Avoid Drowning in Credit Card Debt

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Spending while using a credit card is convenient–until the bill arrives and the pain of repaying it becomes a headache. Credit cards are pretty helpful, especially in emergencies or when paychecks are insufficient to cover the essential needs.

However, when credit card debt goes out of control and keeps piling up, there is no way that repaying could not be overwhelming. Those who are drowning in debt may frequently feel as if the future looks bleak because it is truly difficult to get out when credit card debt gets too heavy.

Thus, to secure financial freedom despite having a credit card, here are some tips to avoid drowning in credit card debt.

Tip #1: Know The Terms of Your Credit Card

The terms and conditions of credit cards are often risky. Most people are drowning in credit card debts because they are unaware of some terms, especially when it comes to interest rates. Some credit card companies will give an enticing offer such as a low introductory Annual Percentage Rate (APR) and a very captivating line of credit.

However, keep in mind that interest rates on credit cards are usually high. Thus, the low introductory Annual Percentage Rate will expire someday, and when it does, a heavy amount of interest rates could begin to pile up, making it difficult to pay. Thus, it is very important to read and understand the terms thoroughly so that unexpected charges can be avoided.

Tip #2: Limit Your Usage of Credit Cards

Credit card companies have already set a credit card limit for their clients. As a credit card user, it is important to be aware of the credit card limit because excessive use may result in higher interest rates and fines, leading to heavy debt obligations. Moreover, a high utilization rate may hurt the credit score.

A hand holding multiple credit cards

However, instead of relying on credit card limits, it is better to actively engage in ways that could keep credit card usage moderate. Thus, to limit the usage of credit cards, always keep a budget for all the expenses. As much as possible, always spend within the means and use the credit card only for emergencies to avoid the risk of not being able to pay it on time.

Tip #3: Choose a Repayment Strategy

For those who have only one credit card, the best strategy is to pay the highest monthly payment. Many ways could help pay off debt with ease.

Thus, you could check out relevant blogs from Friendly Lender for more helpful advice to manage debts and easily repay them. For most people that have handled two or more credit cards, here are some repayment strategies to pay off those multiple credit cards with ease and avoid being drowned in credit card debt.

Debt Avalanche Method

In this method, all the credit card debts must be arranged from the highest interest rate to the lowest. Meet all the monthly minimum payments on each debt first. If there’s excess money, the debt with the highest interest rate must be paid first.

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A person pulling their cash out of their wallet

After that, proceed to the next debt with the largest interest rate with the same procedure. Just repeat the process until all debts have been paid off. This strategy helps to lessen the stress of paying debt and save money from interest rates.

Debt Snowball Method

The Debt Snowball method is the opposite of the debt avalanche. In this method, all the credit card debts must be arranged from the lowest interest rate to the highest. First, all the monthly minimum payments must be met. When there is excess money, it should be paid first to the smallest debt or debt with a low-interest rate.

After completely paying the smallest debt, the next with the higher debt must be paid first. Thus, getting rid of higher interest rates.

Conclusion

Most people live their lives beyond their means because people can spend fast and easily through credit cards. While spending money through debt can be fun, those feelings are only temporary.

As credit card debt increases, it is more difficult to get out of the revolving debt. Living life with worries of debt for a very long time could be stressful and lead to poor health. Thus, when using a credit card, constantly consider all the expenditures to keep being free from financial burden.

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