For better or worse, credit cards can be either a bane or a boon. In a pinch, your credit card can be an easy source of additional funds. This can tide you over during the leaner months when you’re in between paychecks or while you’re waiting on payment.
When mismanaged however, credit cards are a nightmare to deal with. From the frankly extortionate interest rates charged by banks to the erosion to your credit rating, it’s always best to get ahead of your credit card debts.
In fact, so serious is this problem that a 2019 report by CNBC revealed that a shocking 70% of Americans will not be able to pay off their existing credit card within the year. Furthermore a further 43% admitted to carrying outstanding credit card debt for more than 2 years.
What this means is that most Americans are stuck within a vicious cycle of chronic debt and repayment. At the end of the day, credit card debt becomes a kind of perpetual investment for banks with debtors being forced to fork out interest payments alongside repayments.
So, if you’ve found yourself struggling with your credit card debts, here are some of the easiest and most effective ways of chipping away at it.
1. Stop using your credit card
Quite possibly the easiest yet most difficult step, refraining from using your credit card for the foreseeable future is one of the easiest ways to cut back on your debt. While credit cards are a useful bridge in your monthly finances. They are more often than not used for frivolous purchases.
Need to pay for groceries? Use the card.
Going out for dinner? Just use your credit card.
Saw a new watch at the mall? There’s always the card.
The prospect of a 30-day line of credit is enough to tempt us into making unwise purchases. A situation which results in us building up an unhealthy amount of debt each month.
Hence instead of letting your credit card control your spending, you should take steps to curb any unneeded purchases. By simply leaving your card at home or switching to cash for all payments, you’ll find yourself less inclined to spend money that you don’t actually have.
2. Take on a side hustle
In today’s economy, it’s nearly impossible to get by on just a single source of income. When you have a mountain of debt to pay off, staying afloat becomes literally impossible.
Each paycheck seems to shrink every month and you find yourself struggling to make ends meet. Thus you become increasingly reliant on your credit card and the vicious cycle of credit card grows.
To add further insult to injury, the bank hassles you every month to cough up the cash. If this sounds like what you face every month, maybe it’s time for a change.
Thanks to the power of the internet, remote working and freelancing are becoming increasingly commonplace. If you’ve got a skill or a talent, you’re all set. From copywriters to accountants, the gig-based economy has become the destination of choice for organizations searching for top talent.
With sites like Upwork or even Fiverr, you can get started as a freelancer and bring in some of that sweet, sweet income. If you don’t have a talent, you can always make some extra money buying and selling products on the many e-commerce sites like Amazon or eBay.
If you are into sports, you can try to put some money in online betting websites, like BetAmerica and guess the NBA season best picks. However, always wage responsibly and do not use a credit card.
Don’t splurge on that extra cash though. Use it to quickly pay off your outstanding debts and before long you’ll be debt free again.
3. Start paying of your debt
Admittedly, paying off a mountain of debt may seem to be insurmountable at first. From the dozens of demand letters to the scary numbers on your credit card statement, it looks as if you don’t even know where to begin.
Take a step back and breathe. Put your card in cold storage and then start by making monthly payments. Always ensure that you’re paying off more than the minimum amount owed every month.
Often, banks slyly give you the option of making a minimum payment each month which is only sufficient to cover the interest owed. This means that you’re not getting any closer to paying off your best. Forget all of that and ensure that your payments are more than the minimum amount owed. While it may be slow, you’ll be able to pay off what you owe faster.
Credit card debt can be a real burden to live with. However, with the right spending practices and discipline, you can free yourself from it.
