5 Secrets for Paying Off Credit Card Debt

Want to pay down your credit card debt? Well you aren’t alone. And whether it’s your New Year’s Resolution or just your right now resolution, it’s important to approach paying down your debt in the right way otherwise you’ll just keep scrambling to stay ahead of things. With the right mindset, you can get on top of your debt and start reaping the rewards of a debt-free life.

1) Take on smaller debts first.

One tip for paying down your debt? Start small. There’s something about achieving the small victory of eliminating your debt from one card that can give you the motivation to tackle the debts of the larger credit cards. For example, if you have three credit cards and one with a limit of $500 and two others with limits over $2,000. If you start with the smaller credit card, you are more likely to pay down that debt faster. These small accomplishments can keep you on top of your new financial goal. And if life gets in the way, you have at least gotten started on getting your debt down.

2) No matter what pay that minimum.

Paying the minimum payment to your credit cards should be as automatic as paying an electric bill or your auto insurance payment. Even if it’s all you can do while you’re paying other credit cards, pay the minimum on the other cards. It’s detrimental to your credit to do otherwise and you also increase the odds of getting interest charges increase and penalties for late payments as well.

3) Consolidate your credit card debt.

One appealing option can be to consolidate your credit card debt into one with a lower interest rate. This can be an excellent way of managing your debt. However, the only potential downside here is that you do run the risk of using up the credit you just cleared out after you’ve consolidated your debt. So take caution with this approach.

4) Search for ways you can cut back.

Categorize your spending habits – even down to what you buy in the grocery store. Take a look at receipts too. Spending too much on the expensive coffee? Consider switching to store brands. Also, consider brown bagging your lunch rather than buying lunch. Cut back on that extra afternoon Starbucks run. Limit yourself to a weekly budget by getting cash out of the bank and knowing you can only spend this much that week. Small spending habits tend to add up way faster than any of us are expecting, so taking a closer look at your expenses is an excellent way of getting a hold of your debt.

5) Start saving.

It may seem counter intuitive, but starting a small savings account can help you save money in the long run. When a mishap in our life comes in that requires us to spend money to fix (i.e. major car repairs), a lot of us go to credit cards to help fix the problem. However, that’s an almost guaranteed way of getting yourself back into a major debt situation. So start saving, even if it’s small. Schedule money to come out of your bank account and into a savings account on a monthly basis. Before you know it, the next time a rainy day hits, you won’t need to dip into your credit cards to save the day.