How to Reduce the Amount You Owe on Credit Cards
Getting stuck with overwhelming credit card debt is a very scary and stressful situation. Whether you wish to get yourself out of debt or would like to avoid it before it happens, there are a few things you should do to minimize your credit card debt. Here’s how you can do it.
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Pay Off Your Statement Balance in Full
A trap that many consumers fall into is only paying the minimum required payment on their credit card balance. When you do this, while it may be helpful for paying other bills, you are creating more debt to your credit card companies. In addition, interest will start accruing on this debt, and it won’t take long before it becomes hard to deal with. To avoid this scenario, you should always pay off your statement balance in full.
Set a Budget and Cut Unnecessary Costs
If you are having a hard time paying your statement balance in full, this is a big indicator of overspending. As soon as possible, you should set a budget. Gather your paystubs and calculate your earnings every month as you can not exceed this amount. Gather your bills for essential goods and services, such as food, rent, and utilities, and subtract this from your monthly budget. This should give you a rough estimate of how much you can afford to spend on nonessential items as well as put into savings.
If you find that your spending habits exceed that of your income, decide which unessential services or goods to stop purchasing. For example, if you find that you eat out often, try cutting costs by not eating out so often. If you are paying for multiple subscriptions, consider dropping the ones you use the least.
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Use Cash and Unlink Your Credit Cards from Websites
With credit cards, it’s not as easy to see just how much you are spending compared to if you were spending that same amount with cash. Try to limit your credit card usage to essentials and use cash for any remaining purchases. This will help you see how expensive some of your purchases are as well as help prevent you from accidentally overspending. If any websites have your credit card linked, and these sites aren’t covering your essentials like utilities, consider unlinking them. This can help reduce impulse buying as inputting the numbers manually isn’t as convenient as the click of a button.