Having difficulty with your credit cards? Then it’s time you get on top of your debts before they gets out of control. Here are a few suggestions on how to rein in your credit card balances so that you can get a better hold of your finances.

Tip #1: List down what you owe

Gather your latest credit card statements and list down everything that you owe. Make sure that your records include each card’s account number, interest rate, outstanding balance, due date and minimum payment. Detailing everything will give you an idea of how much you need to pay monthly, which would help you determine your budget, and help you decide which card to pay off first.

Tip #2: Prepare a budget and stick with it

After finding out how much you need to pay every month, it’s time to prepare a budget. List down how much you make in a month, and how much you spend for food, utilities, entertainment, etc. so that you can plan your expenses, keep track of your funds and cut back on non-essential costs. But make sure that you follow your budget or else you won’t be able to complete paying your debts.

Tip #3: Prioritize the high-interest cards

Some pundits suggest prioritizing the payment of lowest-balance cards, but we think people should work on the high-interest cards first because putting them off longer means paying more for interest in the long run. Once the card with the highest interest is repaid, work on the card with the next-highest interest. Then rinse and repeat.

Tip #4: Pay more than the minimum

As much as possible, shell out more than the minimum required payment each month to shorten the repayment period. If not, you’ll be paying for decades. By spending more than the minimum, your money actually goes to reducing your principal (i.e. the amount you owe) instead of just paying for the interest.

Tip #5: Reduce your spending

Sticking to your budget is a must when trying to pay off your credit card debts. If you want to expedite the process, try to reduce your spending so that you can allocate even more funds to paying off your debts. You can do this by making some lifestyle changes like using public transport, moving to a cheaper apartment, not buying the latest gadgets, or cooking your own food instead of eating out. Remember: it’s not how much you make but how much you keep.

Tip #6: Consolidate your debts

Here’s a suggestion: Why don’t you consolidate your debts via balance transfer? If done properly, you’ll be able to lower your interest rates, make single monthly payments, reduce/get rid of late fees and improve your credit score. Tread cautiously, however, because you shouldn’t be looking for another credit card at this point.

Unless you can find a card that comes with a zero per cent introductory rate that’s good for more than a year, a regular APR lower than your lowest-interest credit card, and a credit limit large enough to cover all your credit card debt combined. If not, we suggest you stick to paying your debts individually.

Tip #7: Dip into your savings

Have you thought about dipping into your savings to pay for your credit card debts? Consider that at its best, a “high-yield” account with a $5,000 deposit can probably give you around $250 worth of interest (that’s 5 per cent interest) per year. Compare this to the savings you can get from settling a credit card with a $5,000 balance without the 17.99 per cent interest kicking in yet—that’s basically around $899 of savings.

Tip #8: Pay your bills on time

You should pay your bills on time so that you can save money and make the most of your funds. If part of your money is diverted to pay for the interest because of a late disbursement, then you would have to pony up for even more money and stay in debt longer.

Tip #9: Use cash

As mentioned earlier, avoid getting any more credit cards and start using cash in all your transactions. That way, you don’t get in debt any deeper than you already are. Leave your credit cards at home to keep yourself from getting tempted in using them. If you use cash and stay within your budget, you’ll be making a lot of savings and get out of debt earlier.

Tip #10: Supplement your income

Getting a second job or moonlighting is a great way to supplement your income and earn more money to get out of debt more quickly. A part-time gig could even keep you busy and save on entertainment costs. Try searching online freelance marketplaces for secondary employment options.

This article was written by Michael. Michael is a financial blogger who likes to share his tips for managing personal finances. He is also a content writer for creditcards.com.au.

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