Recovery Of Credit Card Debt In 3 Steps
It is far too easy to sit on your credit card debt as it spiral out of control, but the sooner you confront it and seek a solution, the sooner you will be able to break free, pay it back, and stay out of debt for good.
Credit card debt is not uncommon, and in Australia the average cardholder has $3,300 on their cards. If you are struggling to meet repayments, are accumulating late fees, and are paying through your teeth in interest rates, then it is definitely time to look at recovery; it can be long and it can be tough, but it has to be done.
Here is a guide to recovering from credit card debt in just 3 steps:
Change Your Habits
The most difficult aspect of your credit card debt to confront is often not the balance itself, but your own spending habits, and your budget. The first step to recovery is to ensure that you spend less, and cut all spending on credit cards. This is the source of the problem. If it helps then you can cut up your cards.
Take a look at your budget, and think long and hard about what you spending you can cut over a month. Every little helps when it comes to recovery, so cut back on expenses such as eating out, night out, and other treats that you could go without. Put the extra money saved towards your regular credit card repayments.
Get Beyond Minimum Repayments
It is better to be making minimum repayments than it is to missing payments and receiving late fees, so being able to meet the minimum is a milestone in itself. Don’t stop when the ball is rolling though; paying the minimum is just delaying true repayments, and can take many years.
In a lot of cases the minimum repayment is only in line with the interest rate, meaning you are not paying the actual balance of the credit cards. If you can afford to pay more, pay more. When you get beyond minimum payments, target your higher interest credit cards first. This is the most mathematically viable solution to credit card repayments.
The effect of paying off your credit cards is accumulative, as long as you keep up momentum. With less interest to pay, and less repayments to make, you can pay more and more off each month. Just keep putting any extra money back into repayments.
By plowing money back into your debt like this you will be on the road to recovery. Once you get there, keep your habits in check, and stay out of debt!
Seek Debt Solutions
If you are struggling to keep up with repayments, and find that even with a mindful budget that is focused on getting out of debt you still cannot breach the minimum, then you might want to consider other debt solutions.
One such solution is to apply for hardship with your bank. Financial hardship is considered in certain cases, such as when an unforeseeable circumstance changes your financial situation causing you to struggle with your debt. In financial hardship you are willing to make repayments, but are currently unable, and your bank may provide you with relief during this time.
In serious cases of bad credit card debt coming from several lenders, a debt consolidation loan may be considered in order to make repayments more manageable.
No matter how severe your credit card debt there is always a solution, and with hard work changing your budget habits, and the right debt solution if it’s appropriate, you will be able to recover.