With Christmas shopping behind us and a new year approaching, you’re probably looking to start 2024 on a good foot. That means making sure any money you spent on your credit cards doesn’t go unpaid. But if that’s not an option, you’ll need to act fast to prevent any damage to your credit score.
Contact your lender ASAP if you can’t make a payment.
Another option for help with credit card debt is to seek out non-profit credit counseling agencies or debt management programs that can help with budgeting.
“A debt management program allows you to get back on track affordably within your budget, while you also benefit from reduced payments and interest rates until you pay off your accounts,” McClary explained. These programs can help you find a long term solution with your creditors based on your budget, making payments more sustainable. They can also negotiate with creditors on your behalf to create a new payment plan.
Rod Griffin, senior director of consumer education at Experian, suggests contacting your attorney general’s office or the Consumer Financial Protection Bureau, as well as checking Consumer.gov for all of your local options.
If you’re running into budgeting problems that are making it difficult to pay your bills, consider cutting any unnecessary monthly expenses and applying for government assistance. There are programs that can give you an allowance to pay your energy bills — for instance, the Low Income Home Energy Assistance Program. States also offer rental assistance, as well as Temporary Assistance for Needy Families, which helps with food, housing, home energy, child care and job training.
Next, consider canceling streaming services or cable, cutting back on shopping and returning unnecessary recent purchases. Try eating at home more often and cutting back on restaurants and specialty coffees. If possible, work from home to save money on gas. You could also use a “pay as you go” car insurance option if you don’t drive often. These small changes may not be enough to cover your bills, depending on how much you owe, but the money you save can still add up in the long run.
Once you’ve nailed down your opportunities to save, start looking for additional ways to make more money on the side. Go through your storage closet of unwanted items and used electronics and list them for sale on apps like eBay, Mercari and Poshmark. You could start up a side hustle or sign up to be an Uber or Lyft driver. You could also rent out your car on Turo when you’re not using it.
If your credit score is still good enough — for instance, you haven’t missed any payments yet — consider applying for a 0% introductory APR credit card and transferring your balances. You’ll typically need a credit score of at least 670 to take advantage of one of these cards, but shifting your credit card debt to a 0% intro APR card can save you time and money when trying to pay off credit card debt.
However, if you’re already in financial trouble and can’t make your current minimum payment, this may not be the best option for you as you’ll still be expected to make payments on your new card, even during the intro period. If you don’t, your 0% APR period might end early.
If you’re not able to get approved for a 0% intro APR and have multiple credit card balances, consider applying for a debt consolidation loan. Your debt will still collect interest, but you’ll only have one payment to make and you could get a lower rate overall.
