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The start of a new year is a great time to set new goals and create new habits. If getting your credit card debt under control is one of yours, we can help! These five tips will get you started on tackling your debt in 2021 and beyond:
Pay off high-interest debt with a low interest personal loan
Did you know that the average credit card has a 19.99% interest rate? If you fall behind on payments, it can quickly begin to feel like an endless race to the finish line. Credit card issuers can also increase your interest rate by as much as 29.99% if you do happen to fall behind. The best solution for this is to consolidate your debts with one low-interest loan. Not only will you save on interest, but you’ll have one lump sum to worry about instead of multiple avenues of debt to pay down.
Get yourself a low-interest credit card
You can instantly reduce the amount of interest you’ll pay by looking for a low interest credit card. As an added incentive, many low interest cards allow you to do a balance transfer so you can start paying that lower interest rate on your current debt. Do your research and look into the best options for you and your current financial situation.
Remember that credit cards are a great way to access and manage your debt but it’s so important that we use them responsibly. Limit your use of credit cards and make consistent monthly payments that are more than just the minimum.
Create a budget to help you stay on track
Part of the journey toward a debt-free life is creating a budget to help you stay on track. The first step to creating a budget is having an honest look at your finances. For some people this part can be a bit scary, but it’s also very essential. The best way to approach with a budget is start with baby steps. Developing seemingly small but helpful financial habits will make a big difference in the long run but give you something small to celebrate in the short term.
It’s easy to get overwhelmed with big changes, so start small to avoid discouragement or that discouraging feeling that you’re not meeting your own high expectations. Not sure where to start? Try eliminating the amount of meals you order for takeout or start brewing all your tea/coffee at home. The little things can make a big difference over time, and building healthy financial habits is nothing to scoff at!
Monitor and understand your credit score
Taking the pledge to monitor and understand your credit score is one of the most important things you can do, especially when it comes to taking control of your finances. Your credit score is an important indicator of your overall financial health and improving it can actually save you money. Your credit score is determined by a number of factors. You can learn more about how credit scores work by checking out our other blog here.
Create an emergency fund
You’ve most likely heard this advice before, but for good reason! Sometimes life throws you a curve ball, and without an emergency fund, you can easily fall back into your old bad habits or be forced to pull out a credit card as a solution to an unprecedented financial emergency. An emergency fund protects you from life’s curveballs so when one gets thrown your way, you’ll feel more confident in your ability to catch it. Not sure how much to save? As a general rule of thumb, aim for 3 months of your salary.
You can bet 2021 is totally going to be your year! Start it off right by tackling your credit card debt and set yourself up for a prosperous future. Looking for more tips/tricks and professional expertise? Contact us to learn more about managing your credit.