How to Face Your Credit Card Debt in 5 Easy Steps
Day 3: Face Your Finances Series
This post is part of the Face Your Finances series. You can achieve financial freedom sooner rather than later. You don’t have to settle for a life of debt, financial overwhelm, and living paycheck to paycheck. Don’t let your current financial situation make financial freedom feel impossible. It’s time to reclaim control and face your finances!Before we get started, if you would rather read a condensed version of this series as a 7-day email challenge, simply sign up for that option here: Face Your Finances Email Challenge
Credit cards have a bad reputation, and rightfully so. While they have the authority to allow you to purchase any item with the swipe of a card, they also have the power to basically destroy lives.
In fact, here are some really shocking and disturbing stats about credit cards:
- 60% of Americans have a credit balance that they cannot pay off with their current income
- The average American owes $6,000+ on their credit card
- The average credit score is 695
- The average number of credit cards an American has is roughly 4
Stats found in an article from USA Today and ValuePenguin.
If you fall into one of those stats, or if you’re someone who feels like life is being destroyed by credit cards, I’m here to tell you that it’s going to be okay.
I completely understand why it’s so easy to struggle with credit cards during your financial journey, after all, credit cards can feel like ‘free money’.
The good news is that credit cards are not bad when used appropriately.
If you’re deep in credit card debt, it will likely take you some time to climb back to the surface. And, if you aren’t sure if you can trust yourself with credit cards, it might take some time to learn the best ways to use them to your advantage.
No matter where you are with credit cards and/or credit card debt, if you know how to use them to your advantage then they can really improve your financial journey.
To help you face your credit card debt we will cover these 5 areas:
- How many credit cards do you have?
- Total credit card debt
- Credit score
- Different types of credit cards
- Tips for credit card success
Let’s talk about credit card debt!
1. How Many Credit Cards Do You Have?
Do you have one credit card? Five? Ten? Do you have credit cards from department stores, auto mechanic shops, beauty companies?
Those are just the places that have offered me a credit card in the past few months.
These days, credit cards are not just available through banks. Many companies now offer credit cards for their businesses.
Think about it.
Have you ever gone up to a register and been told that you were ‘pre-approved’ for a credit card? If you ended up taking one out, that counts as a credit card. There is a chance that you have credit cards and you don’t even realize it.
So, count up all your credit cards, even the ones you no longer use. Make sure you check for credit cards in your wallet, purse, car, drawer, or wherever else they might be hiding.
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2. Total Credit Card Debt
Now comes the “fun” part. Well, I don’t know about fun, but it’s definitely going to be revealing.
Once you’ve counted up the number of credit cards you have, determine how much debt is on each and every card.
If you are having a hard time figuring out how much you owe on your cards, try using online banking.
I personally have 4 different credit cards. Two cards are my own, one card I share with my husband, and my last card is for my business. My online banking helps me keep track of exactly how much I owe on each card.
Once you know how much debt is on each card you have, add all the debt together so that you know how much your total credit card debt is.
TIP: If credit card debt has been an issue for you, cut up any unnecessary cards. I don’t suggest cutting up all your cards because you never know when you need to use one in case of an emergency. However, if you have too many cards, remove unnecessary temptation so that you can be closer to your goal of financial freedom.
3. Credit Score
You need to know your credit score. Bottomline.
The good thing is that it’s so easy these days to check your credit score. If you have online banking, you can typically check on there for free without hurting your score.
There are also other free options such as Credit Karma. I have used both Credit Karma and online banking to check my score.
It’s good to be aware of your credit score at all times so that you know what your credit health looks like.
According to Experian.com, a good credit score is above a 700. If you aren’t quite there, set a goal and work towards a good credit score.
4. Different Types of Credit Cards
An important factor to success with credit card debt is picking the right card for your situation. There are so many cards on the market, but not every card has the same benefits and interest rates. You need to understand what all a credit card has to offer so that you can choose the right card for your specific needs.
Some cards to pick from include:
- Reward system cards
- Cashback cards
- Travel reward cards
- Student credit cards
- Prepaid cards
- Business cards
Don’t settle on a credit card just because your banker is trying to force one on you. It’s good to shop around for the card that’s best for you and your needs.
5. Tips for Success
There are plenty of debates and opinions out there regarding credit cards. Some say you should have them, some say to avoid them at all costs.
I personally love having credit cards because I use them to my benefit. I have never paid interest on a credit card and I utilize my rewards so that I am constantly earning free money.
With that said, I want you to have the ultimate success with your cards so that you are not getting into debt, but instead using them to your positive advantage.
Here are some tips on how to use credit cards for success:
- Pay your bills IN FULL each month in order to avoid interest rates and to get the most rewards.
- It’s better to use one card rather than rack up debt on multiple cards.
- Never ever skip a payment.
- Be aware of interest rates as they differ for every card.
- Use. Your. Rewards.
- If you can’t trust yourself with credit cards, use cash.
- If you’re in credit card debt, create a plan to pay it off as soon as possible.
It’s time to face your credit card debt and make a plan for success!
Credit cards are a tough task to face because many people rely so heavily on them. If you can change your mindset and use credit cards wisely, your financial journey will become that much easier.
You got this!
Once you have completed today’s tasks, you will be ready to move on to tomorrow’s task: budgeting. See you then!
Check out all 7 days of the Face Your Finances series:
Day 1: How to Do a Financial Inventory With Your Money
Day 2: How to Understand Your Spending in 3 Easy Habits
Day 3: How to Face Your Credit Card Debt in 5 Easy Steps
Day 4: How to Start a Budget You Actually Stick To
Day 5: How to Save Money Like a Pro
Day 6: 17 Way to Increase Your Income
Day 7: How to Take Control of Your Financial Future