What to Do When Credit Card Debt Gets In the WayNov 07, 2018
Gen Xers are feeling the squeeze — and credit card debt is likely just adding to the financial pressure.
According to our Affordability Index, Gen Xers are the age group most likely to be in debt — 83 per cent carry personal debt. Almost half are paying off a mortgage. And then there’s credit card debt — nearly six-in-10 indebted Gen Xers carry a credit card balance.
Even though Gen Xers are the age group most likely to carry credit card debt, millennials and 55+ Canadians also carry their share — half of indebted Canadians in these demographics admit to carrying a month-to-month balances on their cards.
The problem is, any level of debt can negatively affect your ability to afford everyday necessities. Debt can also get in the way of your long-term financial goals.
With the high interest rates attached to credit card balances, dealing with credit card debt should be a top financial priority. But tackling credit card debt can be tricky. It’s not always clear where to start and what steps you should take.
For Gen Xers (and anyone else looking to diminish their credit card debt), here are four helpful tips:
- Know how much you owe
How well do you really know your credit card debt? Before making a plan to find debt relief, it’s important to have a good idea just how much credit card debt you actually carry and the interest rate of each credit card. Using our online debt calculator, you can run the numbers and easily determine how your monthly payments will affect interest charges and the time it will take to pay off the balances.
- Practice money mindfulness
Once you’ve decided to focus on paying off your credit card debt, the last thing you want to do is accumulate more debt. Focusing on mindful spending will help. Essentially, mindful spending means taking a moment. Is the item or service you are about to buy a necessity a want? Can you put your purchase on hold until you have the money to afford to pay for it outright? A good rule of thumb is to wait for 24 hours before deciding to spend the money.
For more tips on how to be mindful with your money — and how it can help you ditch your debt — check out our recent blog article.
- Consider your options
Great news! There may be a way to pay down that credit card debt more quickly. When dealing with debt of any kind, it’s a good idea to do your research and determine what options may be available to you.
Debt consolidation, for example, could provide you with the opportunity to pay down your debt more quickly and more efficiently as it allows you to combine multiple debts like credit card balances, into one single loan at a lower interest rate. As a result, you’ll pay less interest and likely be able to pay down your credit card debt more quickly.
- Use credit wisely moving forward
Once you’ve found debt relief, it’s important to make sure you don’t fall into the same credit card debt trap again in the future. That doesn’t necessarily mean you have to cut up your credit cards.
To stay on track, aim to pay off your balance in full each month and check your statements for errors. Finally, if you find yourself in a situation where you need to use your credit card to cover an unexpected expense, make sure you have a plan to pay off that purchase as quickly and efficiently as possible.
For more tips on avoiding credit card debt, check out this advice from the Financial Consumer Agency of Canada.