It’s Time to Stop Paying Credit Card Debt and Stop Worrying About It
Having credit card debt can feel like an overwhelming burden. Not only does it impact someone financially, but it can also be a huge source of emotional stress. With 54% of people who have debt in the U.S. saying they always or often feel stressed about their debt, credit card debt can quickly consume someone’s life.
If you happen to have credit card debt, you’re not alone – 3 out of 5 Americans have it, too. Depending on the amount, it could feel impossible to pay it off. But there’s still hope.
In this article, we’ll be guiding you on how you can overcome your credit card debt. That way, you can stop paying credit card debt and stop worrying about it. It’s time to start your journey towards tackling your credit card debt!
What Is Credit Card Debt?
Credit card debt is a form of consumer debt that comes about from credit card purchases that don’t get paid off in full at the end of the monthly billing cycle. When someone doesn’t pay the total monthly balance, the residual amount becomes an outstanding balance. The outstanding balance then accrues interest, often at a high-interest rate from the credit card company.
Why Is It So Hard to Get Rid of Credit Card Debt?
People accumulate credit card debt for a wide variety of reasons, from having an unexpected expense come up to overspending. No matter the reason, once you have credit card debt, it can be really hard to get rid of it.
The first reason why it’s so difficult to eliminate your credit card debt is the high-interest rate. As of October 2023, the average credit card interest rate is a whopping 20.72%. On top of that, credit card interest accrues daily, which can quickly lead to a snowballing effect.
Another reason is that credit card companies set the monthly minimum payments so low, making it tempting to pay only the minimum rather than the full balance every month. This could also lead to spending more on your credit card since it doesn’t feel like real money to some people.
Credit cards can be a great way to earn points and rewards for your regular spending if you use them wisely. However, they can put you in a sticky situation that can be difficult to get out of if they’re misused.
What Happens if You Ignore Your Credit Card Debt?
Ignoring your credit card debt can lead to some serious consequences. When you start ignoring your credit card debt and missing payments, the first thing that will happen is your credit card company charging you late fees and even higher interest. Depending on how long the missed payments continue, this can negatively impact your credit score, which can make it difficult to qualify for loans in the future.
If the credit card company still isn’t able to recover any funds from you, they’ll start to turn to legal action and debt collection agencies. This could potentially lead to garnishments taken off your wages to pay off the creditors and liens on your personal property.
As a long-term strategy, ignoring your credit card debt is not a sustainable solution. To avoid any serious financial or legal consequences, you should be proactive in trying to resolve your credit card debt.
Ways to Pay Off Your Credit Card Debt
If you’re ready to start taking steps toward eliminating your credit card debt, here are some ways you can do it:
Regain Control of Your Spending
To regain control of your spending, you should first carefully review your spending. By analyzing each spending category, you can pinpoint where most of your money is going. With this information, you can then create a budget and a plan to reduce spending in certain discretionary categories like eating out and entertainment. Creating a budget and sticking to it ensures that you’re not spending more than you earn, which is a common cause of credit card debt.
Decide What Debt Pay-Off Method to Use
Tackling your credit card debt head-on can feel overwhelming. If you’re not sure where to start, consider using one of the two most common debt pay-off methods. Using one or a combination of these methods can help you kickstart your debt-free journey.
The first debt pay-off method is called the snowball method, which involves paying off your smallest debts to your largest. This method plays on human psychology and can keep you motivated with the feeling of accomplishment after paying off the smaller debt amounts first.
The second debt pay-off method is called the avalanche method, which involves paying off your highest-interest debt first. This method makes more sense financially, but it could be more difficult to stay motivated.
Make More Than the Minimum Payment
As tempting as it is to just make the minimum payment every month, it’s important to prioritize making more than the minimum payment. This can help you create a healthy habit of paying off a more significant amount of your credit card balance each month. If you continue paying just the minimum, the cycle of credit card debt accumulation merely continues.
Consider Debt Consolidation
Debt consolidation is a debt management strategy that involves combining multiple debts into one loan. This is a great way to simplify your debt repayment process if you’re overwhelmed with too many different types of debt and losing track of payment due dates. Additionally, you’re more likely to get a lower interest rate compared to the rates offered by credit card companies when you consolidate your debt.
How You Can Stay Out of Credit Card Debt
If you managed to get rid of your credit card debt, congratulations! After breathing a sigh of relief, it’s time to make a plan to stay out of credit card debt.
Even though creating and sticking to a budget might already be part of your credit card debt repayment journey, make sure to keep living within your means. It’s okay to spend money on fun stuff like dinners out and movie tickets, but try to have some money left over for savings at the end of each month. Put that money towards a savings account that will act as your emergency fund, so you have a safety net when unexpected expenses arise. Having an emergency fund prevents you from having to rely on your credit card during those times.
If you find that you’re the type to overspend when using a credit card, consider using a debit card or cash for your regular spending.
Your Debts Don't Define You
Still feeling trapped by credit card debt? Know that there’s a way out of it. You can start regaining control of your finances by being proactive about tackling your credit card debt. It can feel overwhelming to start, but sometimes you just have to push yourself to get started. It’s time to stop paying credit card debt and stop worrying about it. Start working towards your goal of financial freedom to secure a better future for yourself! All it takes is that first step.
Looking for more information on getting your debts under control? Check out our article on debt relief.