5 strategies for reducing credit card debt
CNN Money reports that the average U.S. household’s credit card debt stands at $15,611. While accruing debt is much easier than paying it down, there are several ways you can knock out those big balances over time.
1) Track your costs. Write down your regular, committed expenses like mortgage, utilities and insurance. Track variable expenses like restaurant outings, entertainment and travel. After several weeks, study credit card bills and bank statements to get an accurate sense of your spending.
2) Create a reasonable budget. “Cutting back can be more effective than completely cutting out,” suggests Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling. “It’s hard to adjust your lifestyle too dramatically and small adjustments can add up to big savings. Cutting out a single pizza dinner each week and changing your thermostat by a few degrees can give you the jumpstart you need.”
3) Pay more than your minimum. Your minimum monthly credit card payment will generally be two to five percent of your balance. At that rate, paying down your debt could take years, costing you thousands of dollars in interest – and that’s assuming you don’t use the cards anymore! Aim to double your current minimum payment.
4) Pay with cash. According to a Dun & Bradstreet study, Americans spend 12 to 18 percent more on credit card purchases than when using cash. Train yourself to carry and use cash to prevent yourself from falling into the swipe-now, worry-later mentality.
5) Combine and consolidate. Consolidating your debt will let you combine several higher-interest balances into one, reduced-rate account. A low rate credit card or personal loan from Northwest, for example, can help you pay off your creditors now, save money on high-interest monthly payments and immediately improve your credit score.
Visit your local office to make a plan to pay down your debt.