6 Things to Do if Credit Card Debt Sneaks Up

Your credit score has a significant meaning to your lifestyle. You may think everything is going smoothly but then you start having car issues, so time to trade it in. If you’re debt is high or your credit score is marred, you will pay much higher interest rates, if you get that car at all.

Intentions are Not Always Enough

Credit card debt can creep up on us, even if we have every intention of paying them off every month when we make that purchase. Our intentions are good, but not always feasible. So, your balances start creeping up and you’ve lost control over your finances. Don’t freak out, just breathe and fix it.

Here are 6 things you can do if that happens to you:

  1. Put your spending on a diet. Start by cutting out all unnecessary expenditures, while postponing essential purchases for as long as possible. Then, look for ways to save money on all your essential purchases. Eating out frequently can add up fast.
  2. Increase your monthly payments. One of the worst mistakes that you can make with your credit cards is to only pay the minimum balance. You should be paying as much as you can every month.
  3. Make your payments before the due date. Credit card interest is calculated based on your average daily balance, so you will save money by making your payments as soon as you can.
  4. Make a payment with every paycheck. When you do this, you will reduce your average daily balance with each payment, which will lower your interest charges.
  5. Use alternative ways to pay for essentials. Temporarily store your credit cards in a secure place and temporarily start using cash, checks or debt cards. Put your credit cards on a time out until the balances are down and you can easily pay the balance each month.
  6. Look at the 12-month interest-free offers. Consider transferring the balance on a card to a temporary interest-free card while you are paying it down, to decrease the amount you have to pay in interest.

Set a Goal and Keep Eye on the Prize

Getting a handle on your credit card debt before you need to can give you a piece of mind and may even prevent a crisis when you need credit. Set a goal as to what you want your credit score or FICO Score to be and work to get it there. Debt to Income Ratio (DTI) is an important part of qualifying for any type of loan, and can be a huge impact on the interest rate you get. Credit is king when it comes to living your life, so care for it like you do your family! Well that’s my tip for this week. Remember to stay on top of your debt, as you never know when you will need the credit! Buying a home is a great example! Folsom real estate is still affordable, along with the Sacramento Housing Market, so give me a call if I can help with a preapproval or refinance. Have a great day.