Marcia's Blog

3 simple solutions for getting out of credit distress

A lot of people can tick off all of the bad things about credit cards, but credit cards can actually be a handy source of cash in an emergency and -- as long as you don’t carry a balance -- they can save you money through cashback and rewards.

But unfortunately, they can also cost you thousands of dollars in interest and wreak havoc on your credit score -- if you don’t pay off the balances each month. It’s all too easy to charge a little something here and there and, before you know it, find yourself overwhelmed with debt. If that is something you’ve been struggling with, first of all, take a deep breath and forgive yourself. We’ve all been there. Now, consider these simple suggestions for getting out of credit distress and putting your financial life back on track.

Add money to the minimum payment. Some people focus on the minimum payments when paying off their credit cards. But if you add just $10 to $20 more each month to your minimum payments, you may be able to save thousands of dollars over time and pay your balance off months or years earlier, depending upon how much you owe. Isn’t that worth eating out one less time this month?

Pay early. If you’ve ever paid a credit card late, you know what it feels like to get hit with late charges. But you might not realize that you can save money by paying credit card bills early. When you carry a balance on your credit cards, the interest is calculated daily on the amount that is owed. When you pay your bill early, the interest calculated after your payment will be based on a lower balance, so it will be a smaller amount. By paying your bills even a week early each month, you’ll pay the balance off faster (and pay less in interest over time.)

Pay multiple times a month. What do you typically do if you spend less money than you planned and you have some money left over in your budget? Instead of buying an article of clothing that you don’t need, consider making an extra payment to your credit card bill. If you pay your bills online, it can be as simple as logging on to the creditor’s Web site and applying the extra money in your bank account to your credit card balance.Don’t wait until the bill is due; move that extra money over immediately before you’re tempted to spend it on something else.

Digging yourself out of credit card debt can seem like an impossible process, but by taking it step by little step, you’ll see that you can be the master of your own financial destiny.