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Be Free of Credit Card Debt Once and For All

Wouldn’t you like to be free of credit card debt? Of course, you would. But when you’re buried by unsecured debt, it can be really overwhelming. Credit card companies prey on consumers that are bogged down by debt and feel they can only make the minimum payment.


The bad news is that only making the minimum payment on your balances will cost you exponentially more than making larger payments that go towards the principal balance instead of just covering interest and fees.


The good news is that with some tightening of the belt and self-discipline, you can be free of credit card debt much sooner than you may have thought. Read on for some of my top tips for getting yourself out of debt and on your way to financial freedom!



Determine How You Got into Debt in the First Place

The first step to getting on top of your debt is figuring out how you ended up in that situation in the first place. Take a look at your card statements and determine how your balances got out of hand. Are you using your cards to pay for everyday necessities and neglecting to pay the balance in full at the end of the month? Are you charging things you couldn’t otherwise afford to keep up with the Joneses?

No matter what got you into substantial credit card debt, identifying the cause will allow you to be more mindful of your spending and dramatically change your habits. If you are paying interest, make sure you never put these charges on your credit cards.

Calculate Your Total Debt

Before you start paying down those cards, you need to know what you’re working with. Add up your balances and get a grand total. This is the highest your combined balances should ever be. From here on out, your singular focus should be to start paying off your cards. Adjust your monthly budget and establish an amount that you can routinely commit to paying down balances each month. The dollar figure you come up with should be significantly more than the minimum payment but not so much that you are cutting into the ‘needs’ column of your budget. Don’t know how to make a budget? Click here to learn! (insert link)


Make it Hard to Use Your Cards

Credit cards work best when they are reserved for emergencies where there is no other option. I don’t even carry mine with me. I intentionally keep my credit cards at home in the safe. That way, there is less temptation to use them but they are accessible in an emergency.


Ideally, your emergency fund should cover the unexpected but having a card available as a last resort isn’t necessarily a bad thing. If you’ve exhausted your emergency fund, a credit card is certainly better than a payday loan or other high-interest options that can wreak havoc on your financial well-being.  Don’t Have an Emergency Fund? Learn How to Start an Emergency Fund.


Always Pay More Than The Minimum

Even if you can only pay $1 over the minimum amount due, always pay as much as you can. The saving in interest will add up to large, large sums over time. We are usually talking thousands of dollars if not tens of thousands of dollars. Paying only the minimum is the trick that “the man” does to keep you in financial slavery. And what you want is financial independence. Don’t fall for it. max out as much as possible every month to more than the minimum.


Pay Down The Card With Your Largest Interest Rate First

Some people make the mistake of paying down the card with the smallest balance first rather than the card with largest interest rate. Remember, your total costs are the amount charged plus the interest. The higher the interest, the more you pay. So always, always, always pay off the card with the highest interest rate first. Any funds beyond the minimum payment due for all your cards should go to the card with the highest interest rate. Always.

Change Your Ways

Now that you have figured out the extent of your debt and how your balances got out of hand, start changing your behavior. Stop using your cards when you have better options. Live within your means and focus your efforts on reducing your balance by as much as possible each month. You should be targeting the highest interest rate cards the most aggressively, as those have the most potential to derail your progress.


Use Cash Influxes to Pay Down Balances

In addition to assigning a portion of your monthly budget to pay off debt, consider using any influx of cash for the same purpose. Tax refunds or income from side hustles are a great way to pay down your debt more quickly. It can be a bummer to devote what may have once been ‘fun money’ to paying bills but it’s a means to an end. Once your debt is paid down, tax refunds or income from side hustles can be devoted to investments or other exciting options!


Don’t Forget to Reevaluate

Once you are out of credit card debt, make sure to restructure your budget so you aren’t tempted to waste that money on frivolities. A best practice is to move the funds you were allocating to debt repayment to building your emergency fund or to an IRA. If you are always thinking about and planning for the future, you are much less likely to be caught off guard!


Get A Lower Interest Rate

Believe it or not, a lot of credit card companies will actually lower your interest rate if you ask. Sometimes they have promotions that you can enroll, sometimes you need to ask an agent, sometimes you’ll need to ask a manager. It certainly can not hurt to ask. Be persistent. I have lowered my credit card rate more than one time by using this simple trick.


Transfer Balance Trick

This is an an advanced tip, so read carefully, otherwise it can cost you a lot of money. You could transfer your balance from one credit card to another that has a lower interest rate. But first, you absolutely must do the following. Find out exactly what the “transfer balance fee” is. It usually ranges from 1% to 5%, but sometimes there are offers at zero percent.

When you know what it is, calculate the transfer balance fee (if there is one) and add it to the new credit card interest rate you will pay over the time period you think you will pay it off. Don’t forget to add interest over years if it is years, or over months if it is less than a month. If the card you are transferring too interest PLUS transfer balance fee is less, then you are saving money. But remember, you might pay it off early, so do another calculation of transfer fee + interest for when you might pay it off early as well. If you are still saving money, you might want to go for it.

But remember, you need to still be lowering all your total credit card debt. So don’t fall into the trap of incurring more total credit card debt across all your cards when doing this trick. This tip is only for those that can stick 100% to their game plan and lower debt, but if you can do it and then apply the interest savings to clearing your credit card debt even quicker, it can work wonders and save you hundreds if not thousands in interest.

Related Posts To Credit Card Debt:

Are you still in credit card debt? If not, what tricks did you use to become credit card debt free?

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