How to Control Credit Card Debt

For decades credit card debt has been at the root of bankruptcy. It has been the main cause of Chapter 7 bankruptcyand is slowly becoming a key reason that people are turning to Chapter 13 bankruptcy. The question remains, why are credit cards and bankruptcy constantly tied to one another and how can we stop it? Here are a few ideas to help you control your credit card debt:

  1. Utilize Auto-Pay: Virtually all credit card companies have an “auto-pay” option available because it ensures that they get paid each month. That may seem like only a perk for the credit card companies, but you can use it to your advantage too. By signing up for auto-pay you do not have to worry about being late on a payment and you will be instantly building credit. Just make sure to set your auto pay to deduct your minimum monthly payment around the time you know you will have the money in your account and you will begin building healthy credit immediately!
  2. Pay Attention to Fees and Interest: Whether you are just now applying for your first credit card or have a wallet full of them you should always be aware of what you are being charged in interest, annual fees, and late fees. Be wary of cards with high annual fees and high APR% because these are the types of fees that push individuals over their credit limit without them even knowing. Once you are over your credit limit or are using more than 70% of your credit line it could possibly reflect negatively on your credit report. As much trouble as it may seem, reading the fine print before signing up for any credit card is the best place to start.
  3. Only Spend Money that you Really Have: Some people say that this rule is the most important and is what gets most debtors into the kind of trouble they can’t overcome without bankruptcy help. Remember that credit cards are not just free money; these credit lines have very strict due dates on when you must pay them back and if you will not be able to pay them at that time do not use them at all. A great way to get in the habit of only spending what you have is to start with small and repetitive purchases such as gas. Use your credit card at the gas pump 1 or 2 times a month and when you get home pay it off immediately so that you can be building credit, but not going overboard and spending what you don’t have.

Despite what a lot of our society thinks, credit cards are not evil. Yes, they may lead to a slippery slope of tons of debt, but if used the right way they can be truly beneficial. The key is to be careful and not to overspend because credit cards can lead to the simplest do it yourself bankruptcy or the most complex Chapter 13 bankruptcy depending on how they are used and abused.

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