Most of the time, you do an excellent job sticking to your budget, avoiding impulse buys, and paying your credit card bills every month.
But then, Black Friday arrives—and you go a little crazy. Or maybe you decide to splurge on grad gifts for your friends or family—and your credit cards take the hit. Or the holiday season rolls around—and you sacrifice your Amex in your quest to buy the perfect gifts.
Don’t worry, because it’s never too late to get back on track! Check out our tips for recovering from credit card woes.
Many people don’t know this, but you can call your credit card service and ask for a lower interest rate. You’re not guaranteed to hear a yes, of course, but it’s worth it to try—two-thirds of the customers who requested a lower rate got one.
You’ll want to prove you’re a good customer, so hopefully you have a history of paying on time. You can also collect offers from other credit card companies to use as a negotiation tool. For example, you might say, “I’ve gotten several opportunities for cards with 12% APRs; would it be possible to lower my rate with you? I’d love to stay with your company.”
Many credit cards come with a grace period, which means that even if your payment is late, you have up to a month to avoid charges. To take full advantage of that time, make short-term sacrifices. We suggest looking at your expenses and cutting out nights on the town, clothing purchases, coffee-shop trips, and so on.
The good thing is that as long as you’re not always spending too much, you won’t have to restrict yourself permanently. Instead, you can put your wallet on a one-month or two-month diet to make up for your spree. Once you’ve balanced the books, you can re-adjust your budget. If it’s hard to muster up the motivation, just remind yourself it’s not for forever!
Sometimes, credit card debt doesn’t feel quite “real.” To force yourself to take it seriously, calculate how much money you owe and its accumulation over time. (Try this calculator.) Once you see that, for example, making $90 monthly payments rather than $60 saves you around $350 in the long run, you’ll be much more motivated to aggressively pay off your credit cards.
However, if you still need an extra incentive, calculate how much time it would take you to make that same amount. If you make $16 an hour, saving $350 is equivalent to saving 21 hours at work. Hopefully, you love your job—but this technique should still incentivize you.
Just because you’ve spent a little too much doesn’t mean you have to lose complete control of your finances. With these tips, you can recover from your credit card woes. As a bonus, you’ll probably be less tempted to splurge next time.