Although credit cards provide a way to cover expenses in emergency situations and can often be a convenient way to pay your bills, many Illinois residents struggle with mounting charges. The average U.S. household struggles with at least $7000 in credit card bills. Fortunately, you can take steps to reduce your debt.
Create a realistic budget
Before you can take any further steps to get your credit card debt under control, you must first evaluate your finances. Make a complete list of all of the debt you owe monthly, including:
• Rent or mortgage
• Utilities
• Each credit card balance
• Each card’s APR
• Loans
• Food bills
• Car-related costs
You also want to consider how much your salary for every month is, as well as any other interests or income-generating accounts that you may have.
Consider a repayment strategy
When attempting to pay off debt, two main strategies exist. The debt snowball method allows you to pay off your smallest debts first, while the debt avalanche method focuses on the larger debt in order to rid yourself of the higher interest.
Consider debt relief or consolidation
Debt consolidation works well for people with good credit, as you are able to place your high-interest credit card loans onto a lower-interest card or use a personal loan to pay off the cards. If your credit score is too low to qualify or if your debt seems overwhelming, you may try credit repair strategies instead. These can include:
• Consulting with a nonprofit counseling agency
• Filing for bankruptcy
• Working with a debt attorney
• Negotiating a debt settlement
Understand that the process will take time
While it may feel as though you got into credit card debt overnight, that is unlikely. Poor spending habits and budgeting likely built up your debt over time. Reducing your balance will also take time, but with a careful financial strategy, you can make it more manageable.