It’s not surprising that a lot of people want to get out of their credit card debts. Of course, being overwhelmed by recurring fees and interests every month is not a good thing to experience.
There are numerous ways you can pay for your credit card debts. Payment plans like debt snowball and debt avalanche are there to ensure that you can keep up with your payments and bring your balance to zero.
However, if you are doing the following things, there’s a good chance that you’ll never be able to clear your debts.
You Only Pay The Minimum
There’s nothing invalid when you just pay the minimum required amount for your debts on your credit card. However, it will take a lot of time before you can catch up to your balances. You see, minimum payments only go to the interest rate and not to the principal amount that you actually owe. Hence, it is a slow and cumbersome process if you opt for this method.
It’s important that you do your own diligence when it comes to your debt payments. There are debt calculators online that can help you grasp the time that it would take before you can clear your debt, assuming that you are going to hand only the minimum value. The figures would certainly tell that you are going to exhaust yourself.
You Are Still Using Your Credit Card
If your goal is to clear your credit card balances, you have to stop using them. That’s the most prudent way to ensure that your goal is achievable and not just a pipe dream. If you keep on making purchases right after you paid for your account, your effort is just in vain. You still end up having the same (or bigger) balance. You will end up sticking to the same vicious cycle.
Credit cards are useful. But if they are becoming a liability more than an asset, you should stop using them. Instead, you should use cash or debit cards in your purchases and transactions. They can help you track your spending and prevent you from incurring further debts. Unlike credit cards, these tangible assets will not cause you to plunge into debts.
Your Credit Card Utilization Is Maxed
One should know that maxing out your credit card is a risky move. First, it harms your credit score. Credit agencies don’t like maxed-out accounts, especially if you have multiple ones in your record.
Second, it is difficult to pay for maxed-out credit cards. They have staggering interest rates, and you are required to pay big if you want to chuck some chunks from them. If you only pay the minimum amount, don’t expect that you can get out of this situation. Most of the payments that you send to your bank will just head to the finance charges. It can get expensive, especially if you have penalty rates due to late payments or exceeding your credit limit.
The more maxed-out credit cards that you have, the more impossible it is for you to pay your debts. Prevention is better than cure. Stop using your credit cards. Don’t apply for new ones, either. Instead, focus your effort on clearing them.
You Have No Idea How Much You Owe
It’s quite tricky to solve a problem that has no clear roots. After all, your aim here is to ensure that you can eradicate the matter down to where it originated. Of course, we are not saying that credit cards are bad. It’s that if you use them irresponsibly, they can become an issue. Again, your credit card should be your asset, not a burden.
Those who have problems paying their credit card debts are probably unaware of how much they actually owe. In fact, being oblivious about this matter is risky, as you are clueless as to how much you need to allocate to gradually lower your balance. You can’t make any sound decisions if you are unaware of the problems that you need to address. If you keep on ignoring your debts, there’s a good chance that you’ll live for the rest of your life carrying them.
You Have Uncontrolled Spending
The way to settle financial problems is to ensure that you are disciplined enough when it comes to your finances. If you live frugally, there’s a low risk for you to incur debts. That’s how simple things should be. At this point, it is important that you learn the essence of budgeting. Once you have a budget, you will be able to track your income and expenses. You will see the areas that you are spending recklessly.
The absence of a budget will make you undisciplined when it comes to your money. And that would lead to persistent problems in the future.