Need Help Managing Credit Card Payments?

Posted on: 22 May 2017

I was 18 years old and had two weeks before I started college when I got my first credit card. I was excited, and a little scared. It was one of the first times I’d really felt like an “adult,” whatever that meant. I'd never bought anything myself except with cash; everything having to do with credit card payments had been handled by my parents.

I didn't really know much about credit cards. I didn't know how they worked. I didn't know what my balance number meant, when to make payments, what would happen if I didn't, and how they affected this number called "credit score" that I heard a lot about but never got to see. And meanwhile, credit card offers kept coming in the mail.

I did what any college freshman would do when handed $600 of apparently free money: bought useless stuff online. Two days and several hundred dollars of fan apparel, posters, lava lamps and juggling equipment later, I began to realize that the positive number on my credit card wasn't the amount of money I had left like in my checking account, but was instead the amount I owed. I began to read the fine print and realize that if I didn't pay off the balance this month, I'd be charged something like 25% interest on whatever remained. And, frantically searching on the internet, I realized that one black mark - one missed payment - on my credit score would dog me for years and years, and maybe someday stop me from getting a mortgage.

I didn't realize that a credit card is a short-term loan, just with lower interest and slightly more flexible payment terms. Had my circumstances only been slightly different, I could have been looking at years of payday loan debt.

Don't make my mistake. Educate yourself. If you’re still in school, check out The Balance’s 5 Habits That Will Shape Your Financial Future. For those of you concerned about managing credit card payments, Smart About Money has a calculator that will help you figure out how long it’ll take to pay off your credit cards.

At Fig, we often work with people who have credit cards but have run into their credit limit. We're proud to provide short term financing services at that help build your credit. But make no mistake: a personal loan should always be a last resort. Credit cards are consistently better and cheaper sources of cash. If you have them, you should use them. A credit card might be expensive, but it's not as expensive as an installment loan.

One tip to help manage credit card debt is to try to make more than your monthly minimum payment. It’s always better to pay your balance in full but if you can’t then try to pay as large a payment as you can afford. It may not seem like you’re saving money by paying off more than your minimum balance but trust us, you are. Since the interest rates credit card companies charge grow every month, you’re saving money by paying off more sooner.

Seem to forget when your credit card bills are due? If you have mobile banking you can set up automatic withdrawals of your minimum balance every month! That way you can cross one thing off your mental to do list.

If you need help paying off your credit card debt or even deciding what the next steps are, it might be worth it to talk to a financial coach! We’re proud to partner with Family Houston and offer financial coaching services to those living in the Houston area. Click Here to schedule an appointment with a financial coach today!

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