My dad despises credit cards. He always says that using a credit card is spending money you don’t have. In essence, a credit card is a type of loan, which can carry an extremely high interest rate if you are not careful.
One of the ways you can keep your credit card balances from ruining your financial future is to examine the reason you use them. For example, if you regularly whip out a credit card to make purchases whenever you see something you really, really want, but really, really don’t have the money for, then you might be an impulse buyer. Impulse buyers tend to live beyond their means and credit cards are vehicles that allow them to do so.
Other people use credit cards as an emergency crutch. Unfortunately, this can lead to large debt balances, which may take years to pay-off, depending on your financial situation. When your debt to income ratio is exceptionally high and you are relying on credit cards to cover unexpected medical bills, car repairs, or other emergency situations, it may be time to reassess your cash flow.
Once you figure out what propels you to use your credit cards so frequently, you can devise a master plan to pay off your outstanding balances. Fortunately, there are a number of options available. The trick is to select a method that works best for you. Your options include:
Consolidation: Combine your credit card debt into one lump sum. You can get debt consolidation loan from a bank or find a low-interest credit card to help you pay debt down quicker with one monthly payment.
High Interest: Pay off the card with the highest interest first. Then, systematically pay the other balances off one by one.
Get help: Join a credit card consolidation service. This is not a quick solution and it can be challenging to find a legitimate service. Only consider this option if you are having serious problems with paying your monthly credit card bills.