In Confessions of a Shopaholic, Isla Fisher’s character was in so much debt, she had to find creative ways to dodge her debt collectors. Let’s hope you are not yet in that stage where creditors are coming after you.
Believe it or not, getting buried in credit card debt is so easy to do. You don’t even have to be a shopaholic to be in debt. Your dues can simply be piling up without you noticing until they spiral out of control. Before you resort to any dramatic tactics, short of changing your identity just to dodge the debt (which you shouldn’t, in the first place), try these three simple tips.
1. GROUND YOUR PLASTIC
It’s not really your credit card that you’re grounding but rather your use of it. A common pitfall among credit card owners is this false sense of complacency that since they’re still within credit limit, they can still afford to use their card. Technically, this is true. Your credit card can still take it but can you? Do you have the money to pay for what you spent? Think about that before you max out your card next time.
What to do: Request for a lower credit limit. If you cannot control your spending, let the bank do the controlling for you.
2. DISABLE RECURRING PAYMENTS
Continuous payment authority (CPA) is basically auto-debit payments attached to your card, such as monthly subscriptions, gym memberships, and billings for utilities. While it does offer you convenience, it charges your card even if you’ve already reached your credit limit. Because the charges are automatically debited, this prevents you from monitoring your expenses.
What to do: Cancel the continuous payment and find another way that you can pay for it yourself. Paying for it on your own will help you become aware of your expenses.
3. NEVER PAY JUST THE MINIMUM DUE
Sure, the company said you only have to pay X amount this month to keep you in their good graces. What they’re not telling you, however, is that even if you pay said minimum, they will still apply the full interest rate (usually pegged at 15 percent) for the entire amount you’ve borrowed from them. So essentially, that minimum due you paid on time only goes to your payment of the interest, and not even to your actual debt.
What to do: Work out a viable payment schedule wherein you will be paying a lump sum amount to significantly reduce the due in your statement, followed by regular and timely payments. This should give you some breathing room because the lower the total debt is, the smaller the interest payment will be.