If you’ve somehow found yourself dealing with high levels of credit card debt, you’re not alone. Millions of Americans are struggling with credit card debt every day. In 2020, Americans carried an average balance of over $6000 in credit card debt from month to month. The economic effects of the COVID-19 pandemic with extended lockdowns and millions of Americans unemployed or underemployed have undoubtedly made the situation worse. If you’re stuck in that credit card debt pit, you can claw your way out. However, it often means addressing some of the behaviors that got you there in the first place. Here are four habits you’ll need to address if you want to put credit card debt behind you forever.
Habit 1: You Pay Only the Minimum Due Each Month
One of the bad habits many people have with credit cards is only paying the minimum balance each month. If you make only that minimum monthly payment, you’ll continue to accrue interest, which will add to your overall debt balance. You could even end up with a higher balance at the end of each month. In fact, by paying merely the minimum amount, you can end up with a high credit card balance even if you’d stopped placing additional charges on the card. Instead of making the minimum payment, you should try to pay the entire balance every month. If you cannot do that, then try to pay as much as you can.
Habit 2: You Ignore Your Statements
Another bad habit credit card users have is not paying any attention to their billing statements. If you don’t bother to check your statements when they arrive, you’ll have no idea how much you’re charging each month or how large your balance is becoming. You also won’t notice errors, possible fraud, or changes in your APR if you have a variable rate card. Instead of ignoring your billing statement, make reviewing it each month part of your budgeting process. Check all your credit card statements in conjunction with the rest of your bills and any activities related to saving and investing. If you do, you’ll be able to spot any discrepancies on charges, and you’ll be able to take action on your credit card balance before it balloons out of control.
Habit 3: Having too High a Balance
As discussed earlier, many Americans are carrying high balances on their credit cards. If you’re one of them, it can harm your financial situation. High balances equate to high monthly payments that can eat into your ability to pay other bills or invest and save for retirement. High balances on your cards can also affect the credit utilization component of your credit score and limit your ability to obtain a mortgage or new car loan. If your credit card balances have grown higher than you’re comfortable with, make an effort to pay them down as soon as you can. If you don’t think you’ll be able to address the balances simply by making more payments, consider using a debt consolidation or even the debt settlement services that National Debt Relief offers. The sooner you tackle high credit card balances, the better.
Habit 4: Paying Your Credit Card Bills Late
Another bad habit people have when it comes to credit cards is paying their credit card bills late. If you’re leading a busy life and have multiple credit card bills to contend with, it can be easy to lose track of them until they’re late. You can rack up additional interest and late fees if you don’t pay your credit card bills on time. Moreover, credit history, or how well you pay your bills, is one of the most critical factors in computing your credit score. Therefore, if you don’t pay your credit card bills on time, it can be difficult to access credit from a lender later on. If you have trouble paying your bills, try using an online bill-paying service that gives you prompts or texts to remind you when the bills are due. You may also want to consider using debt consolidation or a balance transfer credit card to combine all your outstanding credit cards into a new single loan, so you’ll only have one bill to worry about each month.
Ditch Those Bad Habits and Start Using Your Cards Wisely
You’ll never climb out of that credit card debt pit if you don’t put these bad credit card habits behind you. However, it isn’t hard to pay a little more attention and put a greater effort into managing your credit cards each month. Doing so will keep you mindful of the balances you’re carrying and help you turn your credit cards into useful financial tools instead of those high balance monsters that add to the financial stress you’re already carrying around each day.
