There’s no way to get out of credit card debt other than by paying off the balance. But there are many ways to make the payoff more costly than it needs to be.
Credit card balances in the U.S. rose $13 billion between the second and third quarter in 2019.It would be in your best interest to do try to put a dent in your debt that is probably climbing as well with double-digit interest rates every month.
Picking the right method for paying down the balance should be your first step. There are so many options to tackle that debt. We’ve all heard of the avalanche, snowball and even starving yourself to pay off debt. But there are also mistakes you can make along the way that.
3 Credit Card Debt Mistakes to Avoid
Now that you’re ready to pay off that credit card, you need to set up a strategy that won’t end up costing you more money. Here are the three credit card debt mistakes you should avoid.
1. Straying off From a Budget
When you are trying to pay off debt, you need a plan. If you simply jump into paying off debt without a plan, there’s a pretty good chance all your good intentions and extra payments will end up getting spent on other bills.
You can prevent this by sticking on your budget. Actually, making a new budget. When you review your monthly budget, you can see where you might be overspending in certain areas and applying that money to your credit card debt instead.
Bonus Tip: Never miss a bill! Set up automatic payments.
2. Not Applying for a Personal Loan With a Lower Interest Rate
Don’t make the mistake of assuming that replacing credit card debt with a personal loan is just trading one debt for another. Interest rates can make a big difference. The Pacific Collection Group suggests that personal loans generally offer lower interest rates and are an attractive option for people with a high credit score since they can give you a boost – especially if you take out multiple personal loans and pay them off on time.
If you take out a low-interest loan at 4%, it will take you one one less month to pay off a loan, and you’ll save a ton of money.
3. Refusing to Ask for Help
If you feel like you’ve tried everything to tackle it’s time to swallow your pride and ask a professional for help.
Consider contacting a credit counselor. They can review your financial situation and make recommendations to improve it. A counselor can help you organize your credit accounts, develop a budget or even help you set up a plan to pay off your debt.
If your situation calls for a little extra help, there is an assistance option that could suspend your minimum payments or reduce your interest rate temporarily.
You’ll also want to think about life after debt, including sticking with good strategies you used to get out of debt to keep yourself from falling back into bad habits that got you into debt in the first place.