Did you know that credit card companies don't want you to pay off your credit card debt? Why would they? The more credit card debt you have, the more interest you pay to them. And interest is their lifeblood.
Credit card companies have helped to foster our acceptance of debt as part of our lifestyle. We keep spending more than we make by about 10% each month and keep adding to our debt. As those credit card balances keep growing month after month, so too do those minimum monthly payments. There will come a time when we will not be able to afford even those minimum payments. Many people have already reached and surpassed that point.
We have fallen into the credit card trap where we get sucked into the convenience of it all, easily put off payments, and overspend. Have you compared your monthly income to your monthly credit card limit? Pretty remarkable how much larger your card limit is. We use credit cards for just about everything and we have maxed out. The convenience has lulled us into the credit card trap.
So how do you break the cycle? It's all about changing your attitude towards credit card debt. Here are 6 techniques you can use to turn the table in your favor and allow you to break free of credit card debt.
1. Treat your credit card spending as a loan. Most people don't see their credit card debt as a loan. It really is just that. You borrow money and it has to be repaid. It's all about an attitude change.
2. Always watch your balance. Instead of looking at your credit card limit, look at your monthly earnings. Always make sure your credit card balance doesn't grow beyond what you can afford for the month.
3. Keep all your purchase receipts. Costly errors can be fixed quickly if you have the receipts. Also, they help you visualize how much you are spending. Put the receipts some place where you'll see them everyday. As the pile grows, you can see your debt grow.
4. Pay off your whole balance on time each month. This is the best way to break free of credit card debt. You don't pay interest and there are no late penalties. Over time, the savings can be huge.
If you're struggling to pay off your credit cards, there are many different options that can help - for example, you can consolidate credit card debt or get credit counseling. They can make it easier to get a grip on your monthly payments.
5. Treat your credit cards as emergency cards. Don't take them shopping. Use cash or debit cards. If you use cash or a debit card, you can drain your bank account until it's empty but at least you can't spend any more. Amazing how in our society, we aren't comfortable about having our bank account balance go to zero but we'll let our credit card debt grow which, in effect, is taking our bank account "below" zero.
6. Keep your lowest interest rate credit card and cut up the rest. If you don't have them, they can't help you add to your debt.
The credit card companies have you right where they want you - carrying high balances and paying lots of interest. However, by changing your attitude towards credit card debt and using these 6 techniques you can break free.
Thomas Erikson provides editorial on debt consolidation and credit. He is co-founder of Your-Debt-Consolidation-Loan.com
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