Consumer debt related to credit cards is a significant issue in the United States. According to Debt.Org, more than 191 million people have a credit card in America. As a result of this, many people struggle with maxed-out cards and knowing what to do when that happens.
Whether you’ve done a little too much online shopping, or you needed to get caught up on bills and other responsibilities, maxing out your credit cards is common. In this article, we’ll highlight those steps and go into detail on how to perform each one.
Stop Using Your Cards
Many credit cards will automatically decline purchases that exceed your available balance. However, if you’ve opted-in to a policy that allows overcharging, it’s best to stop using the cards completely once you’ve reached the limit. After all, this cuts off any possibility of escalating the issue if you don’t add to the amount of debt you owe.
If you used any of your credit cards to pay for subscription services, it’s important to cancel them or transfer the subscription to a debit card. While we’d recommend canceling the service, moving to a debit card is okay if it’s necessary.
Plan Out a Budget
Before you start paying off your credit card debt, it’d be beneficial to plan out a budget and means of payment. Doing this will prepare you for what’s coming in terms of your financial situation. Having a solid plan can also help keep you on track to pay your debt off as soon as possible.
While it may be tempting to make only the minimum payments on your cards each month, it’s more beneficial to pay as much as you can. Paying more than the minimum requirement will offset any interest payments that are tacked on and speed up the process.
Pay Off Your Debt
Once you’ve stopped using your cards and you’ve mapped out a budget, it’s time for the hardest part: paying the debt off. There are several ways you can do this and whichever plan you choose will largely depend on your current financial situation. Here are the main ways you can pay off your credit card debt:
- Pay it in full: This is certainly the quickest option, however, it isn’t feasible for everyone. Unless you have a significant amount of money in your account, paying in full isn’t an option. This is likely the case for a majority of credit card holders.
- Negotiate with your credit card company: If you’d like to stop using your cards altogether, some companies may allow you to negotiate a lower payback price. If you choose to do this, it may be worth asking for expert help.
- Make extra payments when you can: The amount you’re able to pay will depend on your income. If you find you have some extra leeway money in your account, consider putting that toward a credit card bill.
- Use credit card rewards if possible: Some credit cards come with a rewards program. To help alleviate your balance, you may choose to use any accumulated rewards to put toward a statement credit.
- Utilize debt consolidation: Debt consolidation is a popular option for paying off debt. If you have a good credit score, you may consider taking out another card with a 0% APR on balance transfers and low interest rates. You may also choose to do this with a personal loan from your bank.
Dealing with any type of debt is certainly stressful. Luckily, credit card debt is easily fixable so long as you have a solid budget and repayment plan. To pay off debt, the most important thing you can do is be smart about your spending while paying off your debt and after you’ve successfully paid them off.
By following the steps we’ve highlighted in this post, you’re setting yourself up to pay off your credit card debt as quickly and efficiently as possible.