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Eliminating Credit Card Debt

Mar/17/2024 / by Brian Sodoma

Expert tips to bid adieu to dues for good

Closeup of female hand under a levitating credit card
Photo via Shutterstock

Trae Bodge is known for finding great deals. Frequently tapped by major U.S. television networks for tips, the smart shopping expert stretches dollars and keeps more cash in consumers’ wallets. Bodge’s smart spending principles also apply to managing credit card debt. As of the fourth quarter in 2023, U.S. consumers have racked up a whopping $1.13 trillion on their cards.

That’s not to imply we’re all reckless spenders. Balances can climb for many reasons. There can be unexpected home repairs or medical expenses, for example. However, for some, the allure of great deals does lead to overspending. Whatever the reason, if your credit card balances are pushing your comfort zone, and you want to take control of them, Bodge offers four tips to help.

Prioritize High-Interest Cards

If you carry debt on more than one credit card account, Bodge advises researching which one has the highest interest rate, and to focus on eliminating that debt first. Make the minimum payment on the cards carrying lower interest rates and add extra to the payment on the card with the highest rate.

If your credit is good, you may also have access to zero-percent interest offers. It may be a good time to investigate these options. “See if you can move as much of that (high interest) debt over to a credit card that has a zero-interest rate. That will give you some time to chip away at that debt while also not accruing additional interest,” Bodge says.

Consider A Spending Freeze

If the debt is significant, a freeze on nonessentials may help, Bodge adds. This may also a good time to analyze wants and needs.

“If you are buried in credit card debt you should not be spending right now on anything outside the essentials,” Bodge adds. “If the credit card debt isn’t too onerous, perhaps it’s a matter of establishing healthier spending habits, if that is the issue here.”

If you tend to overspend online, Bodge recommends setting a specific monthly or weekly budget you cannot exceed for those purchases. If you feel like your budget doesn’t have much wiggle room, she suggests trimming “little luxuries.” Those can be that weekly or twice monthly manicure, car washes, home cleaning services or lawn care.

“Perhaps that’s something you can do yourself for a little while as you chip away at your credit card debt,” she suggests. “If you’re getting manicures every two weeks and they’re 30 dollars, you can do it yourself one time and go to the pro the other time. That’s $30 you save and can put towards your credit cards.”

Be Transparent With The Household

If you’re married or have a family, Bodge recommends being transparent about your goals.

“I think it’s OK to say to your kids for the next year I’m really focusing on this and this really helps the financial health overall of our family,” she explains. “And so perhaps each child can only do one sport per season instead of two. We’re only going to eat out twice a month instead of twice a week. I think having your kids onboard with that sets them up for financial success down the road as well.”

Let The Experience Be A Teacher

Avoid “trading up” once the debt pay-off goal has been accomplished, Bodge adds. Too often, all those spending freezes and trimmed allowances are brushed aside once the goal is met and then the debt climbs back up later.

“Once you’re out of debt, rather than finally adding to spending money, perhaps you save that money instead and you put it towards retirement or your kids’ college or a rainy-day fund. I think those financial habits you can form along the way can help you in the long run as well,” she notes.

And for the money you do save, Bodge recommends a high-yield interest-bearing account. The downside to high interest rates comes with how fast it can accumulate on credit card balances. However, the upside is that rates on some savings accounts and certificates of deposit (CD) have climbed to more than five percent, a risk-free option to start growing what you save.

“There are so many great opportunities out there, and many online banks are so easy to work with. You can set up a savings account in five minutes,” she adds.

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