We’ve all been there – unexpected expenses pop up, bills pile up and the holiday sticker shock has just shown up on your bank statements. Perhaps you’ve been relying more heavily on your credit cards due to the holidays, a job loss or change, or just unexpected bills and expenses. Even though the temptation to avoid opening your credit card statement and ignoring the mounting debt is strong, facing the issue head on will not only give you greater peace of mind, but it will allow you to tackle the problem sooner! Keep reading for our tips on what to do when your credit cards are maxed out.
As tempting as it is, applying for a credit limit increase, a new credit card, or a loan from a payday loan, title or instalment loan, or family member will only increase your debt load and further compromise your ability to get out of debt.
An increase on your credit limit may give you temporary relief – but it’s only temporary. Increased debt and racked up interest will only continue to bury you. It’s critical to stop spending and borrowing.
Applying for a new credit card is a poor choice. If you’re in debt, you’ll likely be denied anyway. Applying for credit cards and being rejected actually works against your credit score – so not only will you not have the additional funds you want, but you’ll damage your score further. If you are accepted, the interest rates will be exorbitant which will further hinder your ability to get out from your existing debt load.
Even if it is only the minimum payment, it is crucial that you stay current with all your credit card payments. Getting behind on payments, even just one month, can quickly escalate into multiple missed payments, which can set you back months or years when paying back your debt. This damages your credit, which can take even longer to repair – and may lead to frequent and uncomfortable calls from credit collection agencies.
Transfer the Balance
If you are able to consolidate some of your credit card debt independently, that is always a great option to make your monthly payments more affordable. Moving your balance to a low-interest card can make it easier – and faster – to pay off. One important thing to note: some credit cards will charge a fee to transfer a balance.
Make a Budget
As always, the best way to get ahead on your finances is to first be aware of how much you spend, and on what. Sit down and examine your spending. Are you buying a coffee every morning at your local café for $6.00? By brewing your morning coffee at home, you can save $120.00 a month! Instead of going out for dinner with friends each week, talk to them about finding another way to socialize – such as a board game night at home, or cooking dinner at home. While it can be difficult to admit that you need to spend less money on your family and friends, most of them probably need to be saving money too and will be relieved at a change of plans!
If you’ve tried repeatedly to get out from under your debt, and you find yourself struggling to make minimum payments or change your spending habits, BNA Debt Solutions can help you. Our team of compassionate Licensed Insolvency Trustees are the only people legally qualified to help you file for a consumer proposal or bankruptcy. If you are interested in more information about your options for resolving your debt load, contact us today.