Are you struggling to keep up with your monthly credit card payments? Do you find yourself constantly running out of money at the end of the month? If so, you’re not alone.
While the banks love to tell you that your credit card is a great way to fund a shopping spree, a new gadget, or a holiday, the truth is that some people use their cards as a backup option when they run out of money each month.
The problem with this approach is that your balance never seems to get any smaller because you’re paying only the minimum repayments, which means more interest is accruing on your outstanding balance.
Having a credit card is a privilege and responsibility, but if you’re going overboard with spending, this can become a vicious cycle. And if you’re already in it, it’s not yet too late to do something about it. This guide will show you how to fix your ballooning credit card debt so that you can get your finances back on track. Keep reading to learn more.
#1 Recognize the problem
If you’ve been using your credit card as a form of backup, it’s important first to recognize that this is a problem before you can fix it. If you’re not sure how you use your credit card is a cause for concern, ask yourself some questions.
- Am I struggling to make ends meet each month?
- Do I sometimes run out of money before my next payday?
- Do I spend impulsively when using my credit card?
- Do I often carry a balance on my credit card from one month to the next?
If you answered yes to any of these questions, there’s a strong chance that your reliance on your credit card may be hurting your finances. Credit cards are not meant to be used as a cash alternative, so if you’re finding yourself in this position, you must take immediate action to address the problem – or risk getting deeper into debt.
#2 Look for quick fixes to pay off debts
If you have already recognized the problem and want to get out of debt fast, you can do certain things that will help alleviate your stress and reduce your indebtedness.
Your first option is a balance transfer, but it works if you have a good credit standing. If you have another credit card that offers a low-interest rate, then you can consolidate your balance in one account. You can ask your credit card issuer about the terms and conditions of balance transfer if you choose this route.
Another option is getting a personal loan with a low-interest rate. With a lower annual percentage rate (APR), you can save money from the current interest rate fees you’re paying. You can list down the total amount of your outstanding debt so you have an idea of how much you will borrow.
Getting an informal loan without interest is another option for friends and family, but make sure you pay them on time. The goal in fixing a ballooning is to stop the bleeding and pay off your debt in a single account.
#3 Consider the snowball method if you have multiple credit cards
If you’re serious about paying down your credit card debt but don’t have much time or money to put towards this goal, one method that can be used that is both effective and relatively quick is the snowball method.
In essence, this method involves tackling your smallest debts first instead of starting with the highest interest rate debts until they are paid in full. List down the cards you need to pay off and start with the lowest balance.
While paying down the smaller debts may not seem as appealing as eliminating a large source of debt in one go, it’s important to remember that in addition to putting a dent in your overall debt balance, you’ll also get small wins along the way – which will boost motivation.
#4 Stop using your credit cards immediately
If possible, stop using your credit cards since they will only worsen your debt problem. Instead of reaching for that plastic card when making a purchase, consider alternative methods of paying that won’t incur interest charges, such as cash.
One way to protect yourself from the temptation of using your card is to cut it into pieces. This will reduce the likelihood of interest charges since most companies will only charge you once you’ve spent above your credit limit.
Settle first your outstanding balance, and once you’re done paying off the debt, you can ask for a replacement or request to cancel your card once and for all. If you think debit and prepaid cards will help you manage your finances better, then you can find several options out there.
#5 Work for extra income or sell some of your stuff
Another way to reduce your debt is by working extra hours or getting a second job. This will increase your income and give you that little bit of breathing room needed to focus on the repayment process.
You can find many part-time jobs online where you can work for about three to four hours. Sell stuff you’re not using, or if you need to downgrade some of your gadgets, you’re not using.
Whether the extra money you have is from your side hustle, freelancing, or selling items, just funnel all the money to pay off your debts every month.
If you have been working to make your credit card payments on time every month, but the balance never seems to drop, then these tips may help. Remember, the first step is to recognize that there’s a problem, and if you have finally acknowledged you have a ballooning credit card debt, you know what to fix.
Once you have decided to take action, some options will help provide quick fixes. If your problem has accumulated over time and there isn’t an immediate source of income available, then consider snowballing your debt into one card or loan for more manageable repayment.
Stop using any credit cards immediately until you have paid off all other debts on those accounts before re-establishing new ones again.
Lastly, make sure to work extra hours or generate additional income streams so that more money comes in each month to pay off the debts regularly.
The best way is to make a budget that you can follow up and stick with for 4-5 months. Just don’t give in, even if it’s hard at first. If you want to make this happen, start by changing your financial habits.