A credit card might not take up a lot of room in your wallet, but it can cause huge financial stress on your bank account if you find yourself in over your head. Interest rates and extending credit limits without taking a holistic look at your finances can mean that living beyond your means is an easy situation to get into, and incredibly difficult to crawl out of. Living beyond what you can afford to pay back is not simply a case of splurging on expensive things, it can be done with the best of intentions; paying for vital materials for your business, or needs for your family, compound and accrue interest beyond what you can pay back. So, what do you do if you’re struggling with credit card debt?
Stay in communication with your creditor
Going awol on your creditor will only make your situation worse. It may feel scary and confronting to talk about your difficulties with payments with them, but it will be exponentially better for you in the long run. Particularly if you’re newly experiencing problems with payments, most creditors will happily organise an achievable payment plan. It is always better to pay the very maximum amount you can to avoid accruing too much interest on your card and paying far more over time. You may also have the option to transfer the balance to a more suitable credit card, with lower interest rates for example.
If you find yourself not being able to meet the agreement’s payment plan, call them immediately and discuss your options. You can also contact us to work through your debts and create a realistic, achievable and long term plan; this is especially advised if you are owing on more than one creditor.
Understand your whole financial situation
If you feel like you’re drowning in credit card debt, it’s likely that you are dealing with multiple credit cards and/or other financial debts such as loans and bills. It’s important to know your debt situation holistically if you want to manage realistic payments or alternative options. At Shaw Gidley, many of our clients are looking for a clearer view of their finances, and the best navigation to freedom from it. We can review your financial situation and provide informal or formal options that may be suitable to your individual circumstances.
Make your debts visible
It might feel overwhelming initially, but it’s important you have means to literally see your credit situation, and watch your plan in action. By writing it down, creating a spreadsheet or using a financial template or program to make your debts and payment plan visible is not only a fantastic organisation tool, but it can also be incredibly motivating to make your payments your priority.
This will also assist us with your longer term, tracking your progress and navigating the plan if required to avoid slipping back into old habits and debt.
Shaw Gidley are experts in restructuring, turnaround and insolvency and provide free initial advice on these matters. Please contact our offices on (02) 4908 4444 or (02) 6580 0400.