The Procrastinator’s Guide to Dealing with Credit Card Debt

As much as I wish that no one overspent during the holidays, I know that many of you are facing January credit card statements that are going to set off some stress. You realize there’s no way you can pay off the balance, or what you spent during the holidays is going to painfully add to an already troubling unpaid balance.

You can give up and do nothing. Or, you can be the warrior I know you are and go into battle.

Ready warriors?

Right now, plotting a way to work to work down your credit card debt is extra important. The average interest rate charged on accounts that are not paid off in full is more than 16%. That’s the highest it’s been in 20 years, and could move even higher in 2019 based on how things play out in the economy.

This is the time to hatch a winning plan for paying down credit card debt.

Repeat After Me: Needs Only. No Wants. The first step is to stop digging an even bigger hole. That means using your credit card only for necessary expenses. Groceries. Medical bills. No retail therapy. No “I deserve this” or “my kids deserve this.” Here’s what you really deserve: being out of financial bondage. And credit card debt is the worst type of financial bondage given the high interest rate.

Challenge the Family to Come Up with $100 More a Month in Savings. Or $200. Or $300.  Pull up your last few months of bank and credit card statements. Add up every expense that was a want, not a need. I bet this will be eye opening. Now ask yourself: can I eliminate some expenses? Are there other expenses I can reduce? Do that across dozens of spending choices and you will find you can save a serious chunk of money every month. That is money that can go toward paying down your credit card debt.

Consider a Balance Transfer. If your FICO credit score is at least 720 you may be able to qualify for a good credit card balance transfer deal. With a balance transfer, you move your existing credit card balance to a new card that gives you a period of time where you will owe no interest on that money. Any new purchases that you don’t pay off will be charged interest.

The zero-interest period can be more than year, and some credit card balance transfer offers will let you make the move for free. Even if you have to pay a fee to initiate a balance transfer–it can be 3% or so of the amount transferred–it can still be worth it. Having a year, or more, where your balance won’t be charged any interest is a lot better than trying to tackle your debt while it is being hit with a 16% or higher annual interest charge.

A quick online search of “best credit card transfer deals” will give you some solid leads on cards you may qualify for. Read the fine print and be extra, extra careful. For instance, if you are late with a payment, you may lose your zero-rate deal. And understand what happens if you still have a balance after the zero-rate period expires. Your goal is to get your balance down to zero before that happens. Knowing the high interest rate you will be charged if you don’t achieve that goal might be good motivation to work extra hard to use your grace period to get out of credit card debt.