Many consumers don’t realize that there are two kinds of debt: Good debt and bad debt. Good credit card debt allows you to make your payments in full each much and does not continue to grow. This is important as it allows you to build an excellent credit rating. Bad credit card debt, on the other hand, is debt that continues to grow, whether you keep adding to it, or due to interest accumulation. Bad credit ruins your credit score and can make life very stressful. However, there are some repayment strategies you can put into play today to start reducing your credit card debt.

1. Pay off new charges every month

   Only charge items on your credit card you can afford to pay off each month. This way you never carry a balance or accumulate interest. If you already have a balance on your credit cards, you can alter this plan slightly and make sure you are never using the credit card for further charges you cannot afford to pay off each month. This way you will avoid accumulating more debt. Remember, credit debt that is more than 30 days old begins to build interest. It is always best to pay off as much of your balance as possible each month as this will lower interest accumulation while lessening your debt load.

2. Pay cash when possible

   A simple approach to budgeting is to allot yourself a budget for the small stuff such as magazines, morning coffees or a pack of gum. Then withdraw this amount of money from the bank each week. The reason for this is that cash can be tracked visually. You have to count it out and go into your wallet or pocket to get it. It will be clear when cash is running low, which means it has an almost self-managing benefit.

   When you use credit or even debit cards you are not be tracking your spending in the same way, so it’s not until you get your statement that you will see how much you have spent. Little things can add up fast, and using cash keeps track of it. It is tangible, so you always know what you are spending. This will also allow you to develop healthier spending habits.

3. Get creative with budgeting to pay down debt

   If you find yourself in debt you join millions of other Canadians who are worrying about their debt burdens. The average Canadian debt is close to $23,000 and if you are there or above, there’s no need to panic. Once you get into the habit of managing your spending habits, it’s easier to look at your budget with a more creative eye. Focus on finding at least $100 per month to put towards paying off one of your credit card debts. Then apply this amount every month on top of the minimum required amount.

   Meanwhile, continue to pay the minimum required amounts for other credit cards and loans. Once the balance is paid off on this credit card debt, move onto the next. Pay your minimum plus the amount you were paying for the first credit card. This will allow you to pay off your other loans even more quickly. As each balance is paid off in full you can increase the amount for each card until they are all paid off.

For more information about eliminating credit card debt call Charles Advisory Services at 416-915-9007 or contact us here.