How to Spend Too Much Money Plus 3 Ways to Get Rid of Credit Card Debt

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Follow these tips to avoid overspending on Prime Day and learn more about paying off your debt. (iStock)

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Prime Day this year is June 21-22 June, which means Amazon offers huge discounts on a range of popular products. But think twice before taking on a high-interest credit card debt to buy an overpriced robot vacuum or an instant pot that you’ll only use a handful of times.

Read on for tips to avoid overspending this Prime Day. And if you’re struggling with online spending, keep scrolling for three popular ways to pay off credit card debt. You can also visit Credible’s online marketplace to find various financial products for debt consolidationfrom balance transfer credit cards to personal loans.

9 OF THE BEST DEBT CONSOLIDATION LOANS

Tips to keep your Prime Day spending under control

Shopping online can be an easy way to increase your credit card balance.

β€œIt doesn’t matter how good the deals are if you pay 20%+ interest on a credit card balance,” said Josh Nelson, a certified financial planner (CFP) based in Loveland, CO. “Don’t spend more than you can pay right away.”

Follow these Prime Day tips to avoid taking on more debt than you can repay:

  • Make a list of what you need and set a budget. Amazon puts some of its deals in its app ahead of time, making it easier to plan your purchases in advance. In addition, you can add items to a wish list and set notifications when an item drops in price.
  • Don’t give in to marketing gimmicks. Online retailers like Amazon use tactics like scarcity and urgency to make it seem like only a certain number of items are available or that you only have a short amount of time to make a purchase. β€œProducts for sale on Amazon Prime Day are mass-produced and you need to be careful to avoid scarcity,” said Cody Garrett, a Pearland, Texas CFP.
  • Use price tracking software. Check the price history of an item you are monitoring using a price tracking website such as Honey. This can let you know if you’re getting a really good deal on an item, or if the price went up shortly before the sale.
  • Return items if you regret the buyers. Her easy (and free) to return items you don’t want to return by visiting an Amazon vault, UPS Store, or Whole Foods. Sometimes you can have UPS collect your item for a small fee.

DEBT SNOWBALL METHOD VS. DEBT AVALANCHE: WHAT’S THE DIFFERENCE?

3 ways to pay off credit card debt

It’s easy to lose track of spending with so many shopping holidays all year round. If your credit card balance has spiraled out of control after one too many Prime Days, consider the following methods for: consolidate credit card debt:

  1. Take out a credit card consolidation loan
  2. Use a credit card for balance transfer with a 0% APR period
  3. Sign up for a debt management plan through a credit advisor

1. Take out a credit card consolidation loan

A commonly used way to pay off credit card debt is to a personal loan. Personal loans are fixed-rate loans that are repaid in monthly installments over a period of time, usually a few years.

The biggest benefit of consolidating debt with a personal loan is the cost savings. The average interest rate on a two-year personal loan in the first quarter of 2021 was 9.46%, according to the Federal Reserve. In contrast, the interest on credit card accounts rated interest was 15.91% over that same period.

In addition to lower interest rates, personal loans have fixed rates and monthly payments so that the amount you owe always remains the same. Keep an eye on personal loan costs, such as loan origination fees. And remember that the best personal loan offers are reserved for borrowers with an excellent credit score and a low debt-to-income ratio.

If you decide to pay off debt with a personal loan, shop around with multiple lenders to get the lowest interest rate for your situation. You can compare rates and get prequalified for a credit card consolidation loan on Credible.

LEARN ABOUT GETTING OUT OF DEBT QUICKLY

2. Use a credit card for balance transfer with a 0% APR period

like you have a lot of credit card debt but you still have a good credit score, you might want to consider getting a balance transfer credit card credit that offers a 0% APR introductory period. It allows you to pay off credit card debt at 0% interest over a period of time, usually up to 18 months. You then pay interest on the remaining balance.

Here are a few things to keep in mind when using this debt consolidation method:

  • Balance transfer costs. These are usually 3-5% of the total amount that is transferred.
  • Balance Transfer Limits. You may have too much debt to transfer to another card.
  • Annual fees. Some credit cards have annual fees, although not all do.

If you are interested in a balance transfer credit card, you can compare your options on Credible.

3. Sign up for a debt management plan through a credit advisor

If your credit score is too low to qualify for a personal loan or credit card balance transfer, consider seeking debt relief through a nonprofit credit advisor. These government-accredited agencies can help you pay off your credit cards by enrolling in a debt management plan (DMP).

During this process, your credit advisor will work with your creditors to create a fair repayment plan, and they may even be able to save you money by negotiating lower interest rates. Your initial consultation with a credit advisor is usually free, although enrolling in a DMP may come with a small monthly fee.

When looking for credit counseling services, keep an eye out for debt relief scams and profitable debt settlement companies, which can harm your financial situation. You can find an accredited nonprofit credit advisor through: the National Foundation for Credit Guidance.

Want to know more before taking out a new personal loan or credit card? Contact an experienced loan officer at Credible who can answer all your questions about paying off your credit card debt.

HOW MUCH DOES A PERSONAL LOAN AFFECT YOUR CREDIT SCORE?

Do you have a financial question, but don’t know who to ask it? Email The Credible Money Expert at: moneyexpert@credible.com and your question can be answered by Credible in our Money Expert column.

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