My Credit Cards are Maxed Out, Now What?

If you’ve reached (or surpassed) your credit limit, here are 5 tips to quickly get your credit cards under control!

Everyone wants to sign you up for a credit card: whether it’s a retail card at checkout, a marketing promotion at your bank, or rando junk mail “Pre-Approved” notifications, it seems like the world is constantly trying to get us to open (and use) new lines of credit.

A new credit card means more cool stuff and living better, right? Well, signing up for a new card may seem like a great idea at the time, but it’s more than easy  to get sucked into bad spending habits and spotty record keeping. This results in over-spending, late fees and higher interest rates.

If this has happened to you, don’t panic!  Check out these 5 tips to better manage your credit cards below. And then check out OppLoans for other financial solutions.

1. Cut Back on Spending

The truth is, you probably never needed that cool old Michael Jackson “Thriller” album on vinyl. You don’t even have a record player! With credit cards in hand, impulse buying for nonessentials (no matter how rad) feels easy. But credit cards — especially retail cards — are engineered to get us to purchase things we really don’t need.

For every purchase you consider, ask yourself, is this a need or a want? Groceries for yourself and your family? That’s a need. Dinner and drinks with friends on a Saturday night? That’s probably a want. Once you start seeing your purchases through that lens, it can be easier to decide which buys to forego. (Besides, “Thriller” is a classic, you’ll always be able to find it on vinyl, just wait until you can really afford it.)

2. Plan a Budget

Okay, needs and wants, got it. Now what? Once you have control of your daily spending habits, it’s time to start planning ahead. The first step here is the most important. Start by totaling your expected income for the month, that’s Column A. Then in Column B, list all your basic expenses like rent, food, utility bills, car payments, etc. That’s your outgoing money for the month. No matter what happens this month, you know you’ve got to pay that.

Subtract Column B from Column A, and the money leftover is what you have to spend for the month.

3. Save

Now that you know what you’ve got left over, how much of that can you save? Building your savings, no matter how small the amount, will have a huge psychological impact. You’ll just feel better knowing there’s a buffer between you and the bottom of your bank account.

It’s not easy to save money when your income is low and your bills are high. That’s why it’s critical that you keep a close eye on your budget and a closer eye on your spending. All those wants you’re foregoing from Step 1? The money you would have spent on those can be used to pay down debt and build your savings. Start with a small, achievable goal: Build a savings of $500. Then next month, try to grow that by 25 or even 50%. Each success will motivate you to save even more. Learn more about saving in How to Avoid a Payday Loan: Savings Strategies.

4. Negotiate Lower Interest Rates

This might be surprising but you actually can lower your interest rates on your credit cards. All it takes is a willingness to be annoying persistent.

Call up your credit card’s customer service number. Once you have a representative on the line, explain that you want to lower the interest rate on your card. If you have a history of on-time payments, that could help your cause. If they won’t lower your rate, be persistent and call back weekly. If it does work, keep going! Call back monthly and ask them to lower it further.

You can also always open up a new card with a low 0% introductory APR and transfer your credit card balance to the new card.

5. Credit Counseling

You’ve reduced your spending to bare-bones, you’ve built (and stuck to) a budget, you’re saving money and you’ve even lowered your interest rates…but you still could use some help.

Consider talking to a credit counselor. Credit counselors are financial professionals who educate and advocate for their customers by helping them pay down debt and better manage their financial lives. These services are available online, over the phone and in person—often at no charge.

A credit counselor starts by collecting your financial information like debts, income, loan and bank information, and then will work with you to create an action plan that can include debt management, consolidation and settlement.

Credit Cards can be a great tool. But they only work when used correctly. If you’re in a tough financial situation and just need money now, a personal installment loan from OppLoans could be your solution. OppLoans is NOT a payday lender; our loans are structured to get you out of debt and rebuild your credit. Click below to apply for an OppLoan today.

The information contained herein is provided for free and is to be used for educational and informational purposes only. We are not a credit repair organization as defined under federal or state law and we do not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit. Articles provided in connection with this blog are general in nature, provided for informational purposes only and are not a substitute for individualized professional advice. We make no representation that we will improve or attempt to improve your credit record, history, or rating through the use of the resources provided through the OppLoans blog.