Ignoring your credit card debt or not actively trying to stay out of credit card debt can lead to serious financial distress in the future. The first thing you need to do is to get educated so you can make informed decisions regarding your credit card debt. Don’t let your credit card debt keep holding you back from other more important financial expenses and purchases of your life, such as paying for your children’s tuition or buying a new house. More than anything else, just having some financial freedom is the one of the greatest benefits of being free of credit card debt. Keep in mind that credit card debt is one of worst types of debt you can have. Here are the 5 credit card lessons that will help you stay out of debt:
Don’t miss your payments
Yes, other important events do happen in life and paying your monthly credit card payment might fade into less important events. The best remedy to this is to have set up automatic payments but keep in mind to have enough balance on your account from which you pay to avoid any penalties for going below limits. As you would already know, a bad credit score can lead to multiple problems. You might not be eligible for many types of loan such financing your car or mortgage. Even job applications or applications to a rental property are badly affected by poor credit score. Your credit card history makes up for one third of your credit score. To keep a check on your credit score, visit Creditry . Not only will it help you monitor your credit score, but also alarm you if there is any incorrect credit information on your name. Missing payments not only adds to more interest on your credit card, your lender can increase your interest rate.
Pay more than the minimum payment
Paying your minimum payment is better than not paying anything but if possible try to pay more than the minimum payment. Just being able to pay minimum payment just adds to the total interest you will pay in the long run. Yes, the credit score is also affected negatively if you only pay minimum payment. Credit card debt is like compounding interest, almost a cycle of debt. The longer you take to pay off your credit card, the more likely you are to lose motivation to do so. It can be quite disheartening to see your balance not going down enough if you are making regular payments.
Don’t do any cash advances
Cash advances have even a higher interest rate than your regular credit card rate and there is an additional fee for cash advances. These two reasons combined are enough to make you want to skip cash advances whenever possible. This cash advance fee is the set percentage of the cash advance. Try to use your credit card. Having a credit card balance is still better than a cash advance. Look for other methods of cash if you really need it. For example, get a short-term loan from a low-income credit union.
VIDEO
Ask for help from your credit card company
Several lenders have credit card hardship programs. Your lender will not know you need help unless you ask them so don’t hesitate in getting in touch with them and check if there is a program that helps you or lets you delay your payments. Make no mistake that entering a hardship program might affect your credit score negatively but in the long term you will be better off.
Don’t forget about residual interest
If you are lucky enough to pay off your credit card payment, you are not entirely off the hook. There is a thing called residual interest also known as trailing interest which essentially is the interest amount that has accrued between the final payment and the billing date. It might not be a large amount in some cases but if you forget about it and it gets on the compound interest cycle, it can become a substantial amount. Just make sure you check this before you can officially be free of credit card debt.
The eventual responsibility of being credit card free will fall upon you. If you don’t have credit card debt, be proactive to keep it that way and if you already have credit card debt then make a plan to gradually minimize it. Here is a good article from Forbes on how to consolidate credit card debt. For an additional resource regarding how to get payday loan debt relief , visit this site: debtry.com