Stressed With Your Credit Card? 5 Tips to Relax

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Over the past few years many people have been hurt by the GFC. To supplement their lifestyles, many people have been forced to liquidate their savings and rely on credit cards. While this may have been a short term solution, it has caused many people to accumulate high levels of unsecured and high-interest credit card debt. While this can be extremely stressful, and repayment may seem insurmountable, there are several things you can do to start controlling your debt and reduce the personal stress that goes along with it.

Review Your Situation

Reviewing your historical statements is the first tip to avoid credit card stress. For someone who has accumulated a lot of credit card debt, reviewing historical statements is a very important step in reducing debt and stress associated with credit card debt. Be sure to review at least three month’s worth of statements and categorise all of the expenses into a few categories. The categories should include emergency and unavoidable expenses, recurring expenses and bills, and discretionary expenses spent on things like eating out, buying new clothes, or seeing a concert. Once you understand where your money is actually going, you will be more conscious of your spending going forward.

Set Up a Personal Budget

The next tip to avoid credit card stress is to figure out a personal budget and stick to it. Everyone should set up a personal budget which includes all of their monthly expenses and includes reserves for discretionary spending, paying back excess debt, and saving money. Those who do not have a personal budget are far more likely to rely on credit cards to meet their monthly financial obligations. Even if you have accumulated debt, your level of stress could be relieved considerably if you set up and successfully manage to stick to a personal budget. Seeing your balance remain the same, and hopefully decline over time, will keep you motivated to continue to reduce your balance and will reduce the stress level that comes with having the debt.

Stop Purchasing on Credit

Using and alternative to your credit card such as cash or debit cards to buy stuff is the next step in reducing credit card debt and stress. One of the most stressful aspects of a credit card is not realising until it is too late that small daily expenses quickly add up to a noticeable amount of debt. To avoid being shocked by a large credit card statement you should avoid using your card at all costs. Instead of using the credit card, try using cash or a debit card which would withdraw funds directly from your account. If you do use your credit card, be sure to check the statement online regularly and pay off the balance at least every month to avoid being hit with interest charges. And buy less crap!

Don’t Open New Accounts

Opening new accounts is the fifth way to avoid credit card stress. While the promotions may make opening a new account seem like a great idea, they often require you to make a few purchases before receiving the benefit. Charging items to these accounts will only further add to your pile of debt and will further delay any progress you are making. If you must open a new credit card, then look for the lowest balance transfer offer available at that time so that you can reduce the amount of interest you’ll have to pay.

Negotiation

The fifth way to avoid credit card stress would be to negotiate with your creditors. If you have a high interest rate on your card, and have been current with making your minimum credit card payments, many creditors will reduce your interest rate quite a bit by simply asking. This could cut your interest charges by hundreds of dollars per year. If that is not enough, you may be able to negotiate an easier repayment plan which would transfer your debt from a revolving line of credit into an affordable term loan payment. This should make reducing your outstanding debt a far more manageable task.

Image: Menage a Moi

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