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Tackling Credit Card Debt

Education Posted on February 20, 2021

If a pile of credit card debt is putting a damper on your financial future, you’re not alone. Over 47% of Americans have some sort of credit card debt, with the average household credit card debt equaling just over $7,000.

At Carter Bank & Trust, we believe that credit cards, like any financial tool, can be powerful additions to your finances. But we also believe that freedom from debt is a primary goal for all of our customers. With the right plan, tackling credit card debt can be as easy as it is acquired: little by little.

Pay More Than the Minimum

The first rule in tackling credit card debt is to “stop the bleeding” by budgeting your income so that you can always pay, at the bare minimum, what you spent in the last month — plus the interest that was accumulated by your balance. If your debt burden has stopped growing, you’ve already achieved the most important part of the debt pay-off mentality: no more debt.

Pay Down the Balance

Most credit card statements provide a table that shows how much you could save if you paid above the minimum required payment. Even a dollar extra each month can result in hundreds saved over the course of years!

Putting aside money to pay down debt can be difficult, but a great way to start is to simply round-up on your payments. When you pay off last month’s expenses, round to the nearest ten or hundred. Do the same on interest. Get the mentality that money is no longer available each month — it’s going towards shrinking your debt.

Cut Interest By Transferring Balances

Some credit cards will allow you to transfer balances of other credit cards onto them for no fees, or small fees, and charge your rate to 0% interest on those balances for a set period of time — typically for twelve or eighteen months. If you’ve got debt on a card that’s incurring 18-20% monthly interest, this could mean savings in the hundreds! Just make sure you have a plan to pay the debt off before the new card begins incurring interest. At Carter Bank & Trust, we’re happy to offer credit cards specifically designed with this use in mind.

The Upsides of Credit

Now, like any financial tool, credit cards can be used to protect your assets and even save you money. Once you’ve addressed your credit card debts, you might reconsider taking a pair of scissors to them as some financial gurus like to advise. For one, credit cards with available credit passively build your credit score by showing banks that you already have access to liquidity.

Credit cards also provide an extra layer of security between your assets and fraudulent activity. Unlike debit cards, credit cards don’t give thieves direct access to your funds, allowing your bank to react quickly in case of suspicious activity.

Finally, many credit cards feature some variation on either a cash-back or points-offering, allowing you to permanently cut your costs by a few percentage points on daily purchases like groceries, gas, or even going out to eat. Those savings add up over the months and can be used for additional purchases, savings, or even helping eliminate remaining credit card debt!

We Make Credit Cards Work For You

At Carter Bank & Trust, we offer more than just credit cards designed for helping offload interest-incurring debt. Our wide range of solutions can help you build or restore your credit and get cashback on daily purchases — they even feature entry bonuses that can reward you for your smart spending!

It’s just one part of how we design banking around how it can serve you — not the other way around. Learn more about our credit card offerings online or schedule a call or an appointment with your local branch today.

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