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You are able to borrow money to buy things through a credit card. It offers a lot of advantages , both convenience and security.

But there’s a downside.

Things to Do when Paying Credit Card Debts

Every month, you receive a credit card bill. You can pay the least amount due and you’re fine for another month. Doing so could lead to debt.

You could also spend more than you make. The credit limit sometimes make an illusion that you have more money than you can spend. The swipe of a credit card makes parting with your money easier to do. There is no physical representation of your money disappearing, it doesn’t seem like a big deal.

So what if your credit card bills start piling up,  what should you do?

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Don’ts

• Do not try to pretend your debt does not exist. – Not opening bill statements and hiding them in the drawer, hiding away from debt collectors and not answering the phone, and not acknowledging that you have a credit card debt is making your situation worse. The more you delay dealing with it, the more the interest piles up, and the more money you’ll need to pay.
• Don’t get yourself in more debt – If you’re already in debt, the last thing you should do is get yourself into more debt. Leave the credit card at home if you have the habit of overspending. Thrive for owning only 1 credit card. Doing so would make managing your finances easier. Do not rely on the credit limit, instead assign your own spending limit aligned with your monthly budget. Or much better option is to cease using your credit card use until you’ve settled all your debts.

Do’s

• Have the habit of paying the whole bill every month, not just the minimum needed. – But if you have debts in multiple cards, focus on paying one card with the highest interest first and making minimum payments for your other cards. Any extra money would be used for the card with the next highest interest rate.

• Negotiate with your credit card provider. Inform them of your situation. Doing so, the company will send you a letter suggesting how you could pay off your debt. The credit card provider want to negotiate instead of getting totally ghosted. You could also ask your creditors for lower interest rates.This is only possible if you have a credit score of 730 above, and you make payments on time for a very long time.
• Try doing a balance transfer. – You could transfer your current debts to another card with lower interest rates. It may not solve your problem but it will make paying your credit card debt a little easier. It helps you save more money especially with zero percent or low-rate offers. But once you transfer the balance, close the account of the other credit card immediately. You might be tempted to use both cards and end up with two debts.
• Use a personal loan to pay for your credit card debts. – All your credit card debts would be paid in full while the balance is transferred to one place. Ideally the personal cash loan you use to consolidate your credit card debts is 20 to 30 percent lower in interest than most credit cards. It  would save you hundreds of dollars.
• Increase your income, lower your expenses. – You can increase your income by asking for a raise, switching jobs or having a side hustle or freelance business. But most  importantly, do not upgrade your lifestyle in line with your new salary. If possible, lower the expenses. In this way, you could have a lot of spare money, and you can use it to pay off your debts.

With a good credit history, borrowing money as a personal loans instead of using credit card is advantageous.

Effective Way to Pay Personal Loans

Interest rates can be as low as 5% depending on your credit history.

You can also pay it over two to five years of fixed monthly installments. This makes paying your debt easier.

But everyone problems about finance at least once in their life. This makes payment of your borrowed money difficult to do. There’s sudden unemployment, health problems,  medical bills , and homes losing value. 

Failure to pay back loans, what are the consequences?

This could reach to the point where you don’t answer the call when you suspect a collection agency is calling. You leave the bills unopened and you stuff them in the drawer. You keep quiet to make debt collectors assume no one’s home when coming by.

The longer you don’t pay your loans, the higher the amount you need to pay because of the interest. Your banks and other debt collectors will pester you. Your credit score will drop. Worst-case scenario, you would have to face legal action. You could get lawsuits.

These scenarios will continue to stress you out and trigger fear and panic. You’ll get angry at the creditors who keep sending you bills. You’ll get angry at people and things you can blame, and you’ll get angry at yourself . But all these negative feelings shall perish once you pay off your loans.

So what are the steps you can take?

Start by making a list of all your debts

Having multiple loans with varying interest rates is confusing.

If you have many payday loans with different interest rates. It can be confusing! So, borrowing money to cover all the loans into one with lower interest might be helpful. This is debt consolidation.

Once you’ve made everything manageable, note your total debt with the corresponding interest.   

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Start by making a list of your income and expenses

Note how much you’re earning per month. Now, make a list of your expenses.

This includes your food, your rent, your electric bills etc.

Also note your current financial challenges. It could’ve been a sudden unemployment, or a medical emergency. List it down.

Find out the amount left that you can use to pay for the credit.

Communicate with Your Creditors

The  #1 mistake people make is to try and avoid their creditors. Either by not answering the phone, or by acting as if they aren’t home when the creditors come by. This escalates the problem.

It plants fear in the creditors part, thus they may resolve to persistent calling and visiting your home. Until such time, it may come to a lawsuit.

These could all be avoided once you decide to communicate with your creditor. Explain your situation, show your expenses and income. Be transparent. Then both of you could agree with a new repayment plan that’s convenient for both party.

Increase your Income and Live Below the Means

There are multiple ways to increase an income. One could come up with a side-hustle or a part time job. One could switch to a higher paying job or strive to get promoted.

Sad thing is, when someone increase their income, they increase their spending habits as well. This ends up with the same amount of spare.

When you increase your income, strive to remain with the same amount of expenses. If you can go lower, do that. That will definitely help you get out of debts faster.