Credit Card Alert: How to Avoid the Big Trap of 2019

You know where I stand on having credit card debt. It holds you back from being all you can, and deserve, to be.

I realize some of you have credit card debt due to emergencies, like a medical bill or car repair bill you didn’t have the cash to cover. I respect that not all of you have credit card debt due to overspending. But, many of you do have unpaid credit card bills because you are living above your means, using credit cards to pay for the “wants” you can’t afford.

That’s never a good idea, but right now it is an even worse deal. Have you checked the interest rate you pay on your credit card bills lately? It is rising. The average rate is now more than 17%, up from 15% a few years ago. And 17% is just the average. Many of you are likely paying more than 20% interest. That is insane.

Even worse, I expect the interest rate you are charged on your credit card bills will rise in 2019. Credit card interest rates move in sync with policy changes made by the Federal Reserve. The Fed has been raising a key interest rate it controls–and that impacts credit cards–for a few years, and is likely to make a few more hikes in 2019.

For anyone with credit card debt, 2019 is the year to tackle it. No more delays. No more excuses.

Some tips:

• Use a credit card only for needs, not wants. Make that your mantra and you will spend less.
• Cut your spending. Every budget has some room for cutting so you have more dollars to put towards paying off your credit card bill.
• Pay more than the minimum due on your credit card statement. The minimum due is a trap that will keep you in debt—paying insane interest– for years.
• If you have a strong FICO credit score of at least 720, you may be able to qualify for a great balance-transfer deal, where you will owe no interest for more than a year. Don’t make any new charges on that card, and work like a demon to reduce the balance during the period when you are getting a break on the interest rate. Do a quick web search for “best balance transfer credit cards” to find offers.
• Get help. If you are overwhelmed with credit card debt and can’t begin to dig out on your own, you may be a good candidate for a debt management plan. Contact the National Foundation for Credit Counseling for help connecting with a legitimate non-profit credit counseling service that will help you figure out the best way to tackle your credit card debt.