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6 Tips to Help Manage Credit Card Debt

The sound of swiping a credit card is sweet. But, that’s only until you receive a credit statement. The hidden charges, the interest and late fees, and the ever-dangling threat of bad credit scores can make credit card management a nightmare if you do not pay on time. If you have multiple credit cards and bills pending, then the problem only worsens.

A bad credit score tags you as a “risky borrower,” and you will not be eligible for new credit cards, car loans, personal loans, or a mortgage. Learn to manage your credit cards and maintain good credit card scores with these tips.

1. Understand your credit score
There are two types of credit scores FICO and VantageScore. The credit scores are benchmarks for all lenders to check if you are eligible for credit cards or any other kind of loan.

Many lenders use a FICO credit score. FICO credit scores range between 350-850. A score of 650 is considered a good score, while 850 is exceptional.

VantageScore credit score ranges between 350 and 850. While above 660 is considered good, above 780 is considered excellent.

2. Know your credit score
There are many scoring models generated by multiple companies. The credit score is broadly based on the types of accounts you hold, the number of accounts you have debts against, the credit you have utilized, the available credit, and your payment history so far.

3. Keep track of your credit score
It is important to keep track of your credit score. If you have multiple credit cards for your personal use, business, and family members, tracking the total credit and making payments for each card can be overwhelming. Hence, keep yourself updated about credit scores and consider all the cards in your name, as each card’s transactions affect your credit score.

4. Pay bills on time
Your payment history has a weightage of 70% in your credit score. Every time you default on your payment, it reduces your credit score. One missed payment will not affect your score. However, a series of delayed payments will reduce credit score and will take a long time to recover. Set up an auto payment for your credit card bills.

5. Pay more than what is due
Pay at least $5 more than your minimum. Over 18 months, it is estimated that you save about $425 on interest and pay your credit 17 months faster. If you can, you should increase it to $10 more than the minimum.

6. Reduce your interest rate
The interest on your credit card is not fixed. It keeps fluctuating and is based on many factors. Talk to your card issuer for the card you have had the longest time, negotiate, and save on the interest. You can do it for multiple cards, too.

It is overwhelming for anyone who has multiple credit cards to continually keep in mind these parameters and work out payment amounts, track credit scores, and schedule payments. Thankfully, apps have taken over this job. The apps have features like: