Credit card debt continues to be a huge issue in today’s society. When the bills continue to roll in, the easy solution is to pay them using credit and then deal with the debt at a later date, hoping that some money will miraculously surface in the coming weeks. There’s no two-ways about it, if you are stuck in a cycle of debt, you will have to make some major changes to try and get on top of your financial struggles. Here are 4 key steps towards managing your credit card debts.

Create a budget

The essential first step is to control your spending. If you’re living above your means, you will never fight your way out of debt. Take an honest account of your current spending, look at your current income and expenses, including any debts outstanding and interest that is being accrued. This will help you to get organised and make obvious any unnecessary outgoings. It can be hard, but it is essential to tighten your spending habits and only spend on items that are essentials.

Talk to your creditors

Avoiding bills is not going to get you anywhere, but it is a tactic that is employed far too often. Many companies will be open to setting up a payment plan, as it cuts out the need for them to chase you for outstanding money. If you are honest and explain your situation, they may even waive late fees or accrued interest.  It can be a difficult call to make, but one that could help you in the long run.

Consolidate your debts

There are so many varying rates from credit card to credit card, but generally they sit at around 15 per cent. In contrast, home loan interest rates are sitting at a lower 5 per cent. If you are in the situation where you have a mortgage, you can talk to your bank about refinancing and consolidating existing debts held on credit card into a single debt.
One thing to keep in mind though is the length of time it takes you to pay off the debt. It may be counter-productive to consolidate the debt if it takes you too long to pay it off and you end up accruing more interest than you would have paying the debt off quicker at the higher rate, i.e., if you pay off a 1,000 credit card debt in one year at an interest rate of 15 per cent, it will cost you $150 in interest. If you were to take 7 years to pay it off at 5 per cent, it’s going to cost you more and you’ll get no benefit.

Cut up your credit cards

It doesn’t get much easier than this. If you don’t have the cards, you can’t use them. If this isn’t possible, at the very least once you have your debts consolidated elsewhere, cut the credit limit to a more obtainable amount and use only the one card.

If you have people in your life that are constantly struggling with credit card debt, feel free to share this article with them and help them live deft free.