7 Mistakes We All Make When We Have Credit Card Debt
Let’s just come right out and say it: We all make mistakes.
Accidentally dyed your whites a startling shade of pink in the washing machine? Check. Set off the fire alarm when you attempted your first home-cooked meal? Of course. Said “thank you” to a waiter when they told you to enjoy your meal? Find us one person who hasn’t done that.
And when it comes to money, particularly credit card debt, we’ve all had our fair share of missteps.
In fact, it seems like we’re all making the same mistakes over and over, a la “Groundhog Day.” But the time has come to break that cycle.
7 Mistakes We All Make When We Have Credit Card Debt
If you find yourself dealing with credit card debt and worry you’re not handling it in the best way possible, don’t worry. We’re all in the same boat.
1. Overpaying for Interest (and Never Questioning It)
When you think about how much debt you have, you might feel a little anxious.
That’s where a company like Fiona can be helpful. It can help you find personalized lending options to refinance or consolidate your debt to potentially save thousands dollars in interest.
Fiona will show you all the lenders willing to help you pay off your credit card and eliminate the headache of paying bills by allowing you to make one payment each month.
If your credit score is at least 620, you can borrow up to $100,000 (no collateral needed) and compare interest rates, which start at 4.99%. The idea is to secure a loan at a lower interest rate, potentially helping you save thousands. Repayment plans range from 24 to 84 months.
Take, for example, Katherine, who faced $12,000 in credit-card debt. Holding her back? The 15.24% interest rate. By refinancing with a 5%-interest, seven-year personal loan, she saved $12,000 in interest.
If she’d kept on the same road, she would have paid something like $14,000 in interest alone over 25 years. Yikes.
So even if you’re simply curious about what’s out there, checking rates on Fiona won’t hurt your credit score — and can probably save you in interest.
2. Sticking to a Budget That Doesn’t Work For You
So, you decided you were going to tackle that credit card debt. The best place to start is making a budget, right?
You did some research, picked out a budget method and have followed it to a T — or tried to at least, because we all know budgeting hiccups are inevitable. So why, even though you did the so-called adult thing and made a budget, are you still feeling overwhelmed by looming credit card debt?
It’s pretty simple, actually: There isn’t one magical, cure-all budget. Everyone’s financial situation is different, so it’s important you find a method that actually fits your lifestyle. You want to control your budget, not the other way around.
Don’t just think about numbers such as income and debt when creating a budget. Consider outside factors that could make your planned budget destined for failure.
How much time and energy are you willing to devote? Are you a schedule-follower by nature, or more go-with-the-flow? Are there any obstacles conflicting with your budget, such as an irregular pay schedule?
Finding a budget that works for you will make you feel more in control of your finances, including that pesky credit card debt.
3. Overpaying for Other Monthly Bills
You’ve made a budget, you’ve checked it twice — so why are you still wondering where the heck your money is going?
It’s time to dive deep and figure out which bills are taking more than their fair share. Instead of manually sorting through every single credit charge, let someone else do it for you… or something, really.
First, download TrueBill, an app that’ll negotiate your bills, cancel unwanted subscriptions and refund your bank fees. And yes, that includes the Barnes and Noble membership you’ve had since 2009 — even though you haven’t set foot in a brick-and-mortar bookstore in roughly five years. Tsk tsk.
Another bill that makes your eyes involuntarily widen every single month? You guessed it: Insurance.
Insurance bills can be hard to swallow, but the mere thought of shopping around for new rates is arguably worse. Fortunately, Gabi will do the leg work for you.
And the best part? You don’t even have to fill out any forms. Simply link your insurance account and provide your driver’s license number, and Gabi will go to work..
The service will compare major insurers’ rates for your same level of coverage, and even help you switch on the spot if it finds you a better rate.
Once you trim some of your monthly bills, you’ll have a bit more breathing room for paying off that credit card debt!
4. Overpaying for, Well, Everything Else
Dealing with credit card debt doesn’t mean you can just stop spending money. And a major part of life is shopping, whether it’s at the grocery store for necessities or at the mall for a treat yo’self day.
Luckily, there are services that can help you feel a little less guilty every time your swipe that card. How, you ask? By ensuring you’re getting the best deal possible, one way or another.
First up we’ve got Paribus, a tool that gets you money back for your online purchases. It’s free to sign up, and once you do, it will scan your email for any receipts. If it discovers you’ve purchased something from one of its monitored retailers, it will track the item’s price and help you get a refund when there’s a price drop.
For once, it’s a good thing to not clear out your inbox.
Another way to avoid overpaying while shopping online? Ebates, a cash-back shopping site that rewards you simply for buying something online! You can earn 1% to 25% on purchases from more than 2,500 online retailers.
There’s no charge, and Ebates even offers you a $10 Walmart gift card as a sign-up bonus.
Disclosure: Paribus compensates us when you sign up using the links we provide.
5. Letting Bills Fall Behind
It’s no secret that falling behind on payments is basically the opposite of what you want to do when dealing with credit card debt or any kind of debt, for that matter. What we all need in this situation is a little incentive to stay on track.
That’s where MoneyLion comes in This app offers rewards to help you develop healthy financial habits and will literally pay you for logging onto the app.
You connect it to your bank accounts, credit cards and other financial accounts. Based on your income and spending patterns, it offers personalized advice to help you save money, reduce your debt and improve your credit.
The app’s reward program will give you points for being financially responsible. Make a loan payment on time? Boom, 200 points right there. You can redeem them for gift cards to more than 15,000 retailers, including places like Walmart, Applebee’s and Amazon.
Let MoneyLion help you stay on top of those credit card bills, and handle them like a boss.
6. Thinking You Can’t Afford to Save
Sure, you want to pay off your credit card debt as quickly as possible. But that doesn’t mean you shouldn’t still be devoting some money to your savings.
What if you get hit with an unexpected expense, such as a busted water heater or a trip to the emergency room? Without ample savings to help you out, you’ll only add to your debt anxiety.
We know saving money can be tough, but what if you could do it without even thinking about it?
No, we’re not talking about sorcery, we’re talking about Digit, an innovative app that will automate your savings.
All you have to do is link your bank account, then Digit uses an algorithm to calculate how much money you can safely set aside each day. It will put that money into a FDIC-insured savings account.
The out of sight, out of mind strategy takes the stress and legwork out of saving. One Penny Hoarder, a self-proclaimed “bad saver,” managed to tuck away $4,300 using the app.
Digit is free to use for the first 30 days, then it’s $2.99 per month afterward.
7. Letting Your Debt Take All the Fun out of Life
Listen, we understand that credit card debt is always at the back of your mind, popping up uninvited, trying to stress you out. We’ve all been there.
But here is a money mantra we stick with and want you to give a try, too: My debt does not control me.
You can be responsible, make budgets and stick to them; pay your bills on time; and save on expenses when possible. And all the while, you can live your life without sacrificing all of the fun stuff. Your financial health is important, but so is your physical and mental health!
Constantly be on the lookout for sneaky ways to save while still enjoying your social life, like hosting happy hour at your house instead of going out. And if you’ve got the time, consider finding a side gig that not only lets you earn some extra income, but is just flat out fun.
Might we suggest dog-walking with Rover? I mean, come on: Getting paid to hang out with dogs? Sounds like a slam dunk.
In short, your credit card debt is obviously important, but don’t let it stop you from living your best — but still financially responsible — life!
Kaitlyn Blount is a staff writer at The Penny Hoarder. She’s made her fair share of money mistakes on her debt journey. Do you have five, maybe six hours to spare to hear about them?