Credit cards can be a great way to stretch your money until payday and a handy way to buy online. (And who doesn’t love to watch their credit card rewards pile up?!?)
But are you reaching for your card more often than you should? If you find yourself making the minimum payment month after month, that’s probably a sign the answer is “yes.”
Ready to get out of credit card debt — or avoid it in the first place? We’re here to help.
Five steps to get you out of credit card debt. Credit card debt is a reality for lots of us. According to the Federal Reserve Bank, the average credit card debt for families in the U.S. is $6,2701 and those that carry a balance will pay an average of $1,155 in interest charges.2
Tired of spending your hard-earned paycheck on credit card interest? Check out our five-step plan to get out from under.
Six tips to keep you out of credit card debt. This time of year can be hard with the one-two hit of back-to-school, plus, before you know it, the holidays. Own your credit card spending with these five tips.
1. Use Summit's Climbr®.
This FREE, easy-to-use tool will help you stay on top of your spending, set a budget and so much more. Let Climbr help you track your money.
2. Understand your credit cards.
How many credit cards are in your wallet? Do you have too many and are they tempting you to overspend? What are the interest rates and fees on each? Knowing might help you decide which card is smarter to use.
And do you find yourself justifying a purchase because you’ll earn rewards? If you can’t pay off your bill each month, your interest payments could be more than the reward is worth.
3. Buy mindfully.
Before you pull out your card, slow down and ask: Do I really need this? Will I be able to pay for it when the bill arrives? What will I have to give up to afford this? Put a 24-hour hold on your purchase and see if you still feel the need to buy it the next day. For more on how to be thoughtful about your finances, read our tips on money mindfulness.
4. Leave your credit card at home.
This is the easiest way we know to avoid overspending!
5. Set up a separate account for credit card payments.
Look at your credit card statements for the last six months to see how much you usually spend. Decide what you can really afford each month, then set up a separate account and deposit this amount of money as soon as you get your paycheck. Only use this account to pay off your cards.
6. Pay your credit card bill the same day you buy.
Whenever you buy with your card, transfer the money from your savings account and use Summit’s online bill payer to pay off your card balance right away. You’ll know exactly where you stand in terms of credit card expenses and are less likely to run up a bill you can’t afford.
Use your credit card wisely and it can be a great tool! And if you don’t already have a Summit card, check out your credit card options.
Smart money tips brought to you by Red SHOES, Summit’s exclusive financial wellness program.
1 https://www.valuepenguin.com/average-credit-card-debt#average-credit-card-debt
2 https://www.nerdwallet.com/blog/average-credit-card-debt-household/
