How do you get out of credit card debt? Here’s a strategy that works
Thank you again for downloading MyBudget’s 6 Steps to Get Out of Credit Card Debt eBook.
Downloading a book feels like a small step, but it’s actually a BIG LEAP towards becoming debt-free and stress-free! If you’re wondering ‘What can I do about credit card debt’, you’re in the right place. This article will show you how to choose a credit card debt strategy that works. By the end, you’ll understand why some approaches succeed, while others fail, and what steps to take next.
You’re not alone in wondering, ‘What can I do about credit card debt?’
Credit cards are one of the leading causes of financial stress and there are a number of reasons why:
- A lot of people rely on their credit cards to make ends meet, especially if they don’t have savings to fall back on.
- Credit card debt has a habit of spiraling. You’re on top of your repayments one moment, then suddenly you’re not.
- Credit cards are expensive. The average card charges around 14% per annum, but rates as high as 24.99% aren’t uncommon.
It can be hard to sort credit card myths from facts, before you know it, you’re knee-deep in debt.
What are your options?
All of these points above are good reasons to break up with your credit card. But the question is: how?
How do you get out of credit card debt if you don’t have any spare cash or you’re relying on your cards to make ends meet?
You could ask your credit card company for help
One approach is to contact your credit card company and ask for their help with a payment arrangement. Lenders are obliged to help customers who are in financial hardship. They also want to keep your business, so don’t be afraid to call them.
But when you do, you need to be prepared. The lender’s customer service staff are going to ask you what sort of payments you can afford.
Unfortunately, this is where a lot of people come unstuck. Instead of knowing exactly what terms they can afford, they commit to any arrangement that lowers their repayments.
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Admittedly, this is a complex process that most people don’t have experience with – even more so if multiple card companies are involved.
The further challenge is that you usually only get one go at it. If you break a payment arrangement, the lender is very unlikely to offer you another one.
To help with credit card debt, you could apply for a zero-interest balance transfer
An alternative strategy is to find a zero-interest balance transfer offer. That’s where you move your existing credit card balance to a new card and, for a set period of time, you pay no interest.
This means that 100% of your repayments go towards paying down your balance. Some offers will also allow you to roll multiple credit cards into the new card. This can be a great way to simplify your debts.
Unfortunately, however, it’s not uncommon for people to get into deeper debt this way. It’s either because they’ve:
- Kept using the old card or…
- They’ve started adding charges to the new card or…
- They don’t manage to reduce the balance during the interest-free period.
Sometimes it’s all of the above.
So how do you succeed at getting out of credit card debt?
How do you get out of credit card debt in the quickest, most affordable and stress-free way?
The answer is to create a budget
Budgeting sounds boring, right? Actually, no. A detailed, long-range budget is really the only way to know what arrangements are affordable for you. Anything else is guessing. But some people might be wondering: ‘What if my budget doesn’t balance? What if my expenses are greater than my income?’ Well, that’s even more reason to create a budget.
Your budget will show where your money is going and where you can make changes. Most importantly, it will help you work out exactly which debt strategy is right for you. Here’s how to make a budget.
What can I do about credit card debt? Next steps
To help you create your own budget, we’ve designed a budget template you can download for free. It comes with step-by-step instructions and helpful tips. Click the button below to download your free budget template.
Do you have more money going out of your budget than coming in? Don’t worry, we can help with that too. MyBudget’s money experts are skilled at solving problems. We can make even the most challenging budgets balance. To find out more go to mybudget.com.
I’ll be back in your inbox tomorrow with examples of real people who got out of credit card debt without compromising their dreams or lifestyle. I’ll show you how they did it and how you can test the same approach FOR FREE.
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