A Guide On Paying Off Retail Credit Card Debt
If you have more than one credit card and one of them is a retail card, put your attention on paying off the retail card first.
Of course, you must make your minimum payments for all of your credit card balances, but there are a few things you should know about these retail cards that will help you understand why they need to get paid off first.
Paying Off Your Retail Credit Card Debt
If you have a credit card from a retail store, you are probably paying a much higher rate of interest on any balances that carry over from one month to the next.
This interest rate is given to everyone, even if you have a perfect credit score and have qualified for low rates on your standard credit cards.
The credit limits on retail cards are usually much lower than you’ll find on regular cards and when your debt starts approaching its limit you can get flagged for being a default threat.
You certainly don’t want to have this happen because it can be reported to a credit agency.
If the default threat is noted on your credit history, it can have an negative impact on your credit score. Other creditors will take note of this through a default clause that is universal.
Here are some tips to help you avoid debt when you have a retail credit card and keep your credit score intact.
Get Rid of the Card
Sometimes it can be very difficult to get rid of a credit card once you have it, but if you already have another standard card, you really don’t need a retail credit card.
You can do all your shopping on your standard card at a lower rate of interest and save money when you have to carry a balance over from one month to the next.
If getting rid if this credit card altogether is too painful, you can try giving it to a friend or relative and ask him to hold it for a certain amount of time.
This will let you know whether you can survive without the card and will also stop you from spending and piling up more debt.
If you can’t use it, you’ll be able to get caught up on your payments without adding new purchases to the balance.
Stick to a Budget
If you make up a monthly budget, you’ll be able to see exactly how much money you’re spending every month on your credit card.
Many people do not have a budget that they work with and have no idea where all the money goes during the course of a month.
Add up your income and expenses and see how much disposable income is being wasted with your retail credit card.
This might be enough of a wake-up call for you to be able to get rid of the card altogether and start using a standard credit card with low rates.
Stop Using It
If you have the willpower to just stop using it, you can hide your credit card away in a drawer. Keep making payments on it and don’t start using your credit card until your balance is down to zero, or close to it.
You’ll be able to avoid getting into deep debt by using the suggestions above. A retail credit card can really lead to trouble very quickly and it is always better to use a standard card in its place.
