Published in: Credit Cards | Jan. 12, 2020

4 Reasons You Still Have Credit Card Debt

By:  Kailey Hagen

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You can get out of credit card debt, but you may need to change your approach.

Credit card debt is financial dead weight. It costs you a lot of money without offering any real benefit and can be really hard to get rid of once you get into it. Many people try to break out of the debt cycle but fail to do so, usually for one of the following reasons. If any of these apply to you, consider switching up your strategy to start seeing some real progress.

Young woman anxiously chewing on credit card while looking at phone.

Image source: Getty Images

1. You're spending too much

When you're trying to pay down credit card debt, you should reduce your credit card usage to prevent your balance from growing any further. You should also reduce your spending overall to free up more cash for debt repayment. If you're spending indiscriminately without giving any thought to your credit card debt or its long-term impact on your financial security, your debt problems will likely get worse over time instead of better.

Switch to cash instead of credit cards where possible and create a budget for yourself, cutting out unnecessary expenses like dining out. Put all the extra cash you save each month toward your debt repayment until it's paid off.

2. You're only making the minimum payment

It is possible to pay off your credit card debt by making the minimum payment, but only if you don't charge any more to the card and have a decade or two to spare. It can take years to pay off your credit card debt if you're only making minimum payments, and you'll probably cost yourself thousands of dollars in the process. If you want to make real headway, you have to start paying more than just the minimum each month. 

3. You're not using balance transfer cards

Balance transfer cards are one of the best ways to pay down credit card debt because they temporarily halt your interest payments, and so stop the growth of your debt. They give you a 0% APR for six to 21 months, depending on the card. You will pay a fee to complete the transfer, often a percentage of the balance you’re transferring, and if you cannot pay it all back before the introductory period is up, your remaining balance will begin to grow at the standard APR.

Balance transfer cards are a one-time-only opportunity, so you must be serious about paying down your debt if you're going to use them. When the introductory APR period expires on a card, you can never get it back again. If you have poor credit, this option might be off the table because your application may not be approved. In that case, try the next tip instead.

4. You're not targeting one card at a time

Targeting one card at a time is your next-best option if you're unwilling or unable to open a new credit card or take out a personal loan to cover the balance. This strategy involves making the minimum payment on all your cards to avoid late fees and then putting any extra money you have toward the card with the highest interest rate. When this balance is paid off, you throw all your money at the card with the next-highest interest rate, and so on, until you're debt-free.

It takes time, but this approach will minimize the amount you pay in interest overall. You can speed things up by limiting how much you charge to your credit cards so that your balance doesn’t grow any further.

Once you're out of debt, don't go back to the bad habits that got you there in the first place. Understand the causes of your credit card debt and take steps to ensure that they don't happen again -- such as creating an emergency fund to cover unexpected expenses. 

Even if you use the above strategies, it will probably take you several months to a few years to get out of credit card debt depending on how much you’ve taken on, but don't let that discourage you. Getting rid of your credit card debt will reduce your stress, increase your financial security, and probably help your credit score, too, so it's well worth the effort.

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