As a recent graduate or young professional, you have much to look forward to in life. However, when you accumulate significant credit card debt in your 20s, you may contemplate your options for seeking financial relief from such a substantial burden.
Whether due to a lack of funds while transitioning from being a student or misinformed financial habits, credit card debt can sneak up on you quickly. Credit cards offer many perks, including financial rewards, security, the opportunity to build up your credit score and more. However, consistently using your credit cards without regularly paying off your balance can lead to a poor credit score, significant interest payments and a mountain of insurmountable debt.
How to get a handle on your credit card debt
The Federal Reserve reports that Americans owe $1.04 trillion in credit card debt. While 40% of these individuals have the means to pay off their balance in full each month, the other 60% maintains a high balance from month to month.
As a recent college graduate or young professional working in Rockville, Frederick or D.C., you may put off prioritizing your debt until another month or year. While this may seem reasonable at the time, putting off your credit card debt can only enhance the debt you owe and rack up considerable interest payments. Instead, consider several habits or actions to implement:
- Pay more than the minimum payment. Paying just the minimum payment is still progress, yet it may take decades to pay off what you owe.
- Stick to a budget. You may have significant student loan debts in addition to credit card payments. Make a plan to account for both financial obligations.
- Make the most of your money. Understand exactly where your money goes to cut out unnecessary expenses and contribute more toward your debts.
- Consider debt consolidation. When you have multiple credit cards and a good credit score, this may allow for lower payments and interest rates.
In some situations, no matter how hard you work at paying down your debt, the balance you owe may seem impossible to overcome. In such cases, filing bankruptcy can be an option to eliminate credit card debt and start fresh. Discuss your situation with an attorney to weigh the pros and cons of bankruptcy and other debt relief options.