If you have excessive credit card debt, you are far from alone. In fact, in 2020, the average American owed more than $5,000 to credit card companies. This makes sense, as many individuals have little choice but to reach for credit cards to cover both ordinary and emergency expenses.
Having credit cards is a good way to build a good credit score. If you accumulate too much debt, however, your credit cards may work against you. Here are three ways to take control of the plastic in your wallet or purse.
Because many credit cards offer cashback and other types of rewards, it can be tempting to pay with your card. Still, you should not let your credit cards lure you into developing poor spending habits. If you can stay within your means and pay off your credit card balances each month, you are likely to realize some immediate financial benefits.
Credit cards often come with massive interest rates. If you are not able to pay off your total balance at the end of a billing cycle, you are likely to pay more for goods and services than they are worth. Therefore, if you have an unexpected expense, it may be wise to look for other financing options. For example, your bank may offer you a loan at a lower interest rate than your credit card.
If your outstanding debt makes you uncomfortable or nervous, you may not open your credit card statements. Still, to regain control over your finances, you need to know how much debt you have, how much credit you have left and how much interest you are paying.
Ultimately, if opening your credit card statements causes you to panic, you may want to explore bankruptcy or other debt-relief options.