Health Advocate Blog

Become more credit conscious

Using credit cards can be a helpful way to manage finances. Yet incurring mounting debt from high interest rates with high finance charges, especially on multiple cards, is extremely distressing. Stress caused by a poor financial situation can lead to serious health effects including anxiety, depression, ulcers, substance abuse, digestive disorders, muscle pain and insomnia. Properly managing and maintaining good credit is a critical component to financial wellness. Here are tips to help you reduce your existing credit card debt.

Try these steps to reduce your credit card debt!

  1. Write down the names, balances, minimum payments and interest rates for each card.
  2. Select a pay-down strategy. There are two strategies to reduce your credit card debt:
    1. Strategy 1: This strategy will save you money over time by keeping your interest rate in check. Rank your credit cards from highest interest rate to lowest interest rate, regardless of the balance. Pay the credit card with the highest interest rate first, then proceed to the next highest interest rate, and so on.
    1. Strategy 2: This strategy is the fastest way to reduce debt on individual cards and can help increase your confidence to pay off cards, but it also can be the more expensive route. Rank your credit cards from lowest balance to highest. Start paying the cards with the lowest balance first, then proceed to the next, and so on.
  1. Put all of your extra money plus the minimum monthly payment toward the card you have chosen to pay off first. The more you’re able to pay, the faster you’ll pay it off with the least amount of interest added.
  2. Continue to pay the minimum monthly payment on all your other cards.
  3. Don’t make any new purchases on the card you’ve chosen to pay off.
  4. Repeat steps 1-5 until all of your credit cards are paid off.

Remember, pay your balances on time to avoid paying late payment fees!

Each of your credit card balances directly affects your credit score, which measures your creditworthiness (how likely you are to pay back a debt, based on your credit history). Late and missed payments can lower your score, making it difficult to for you to borrow money for a mortgage or car, for example—you’ll pay more for the money you’re able to borrow. On the other hand, the longer your credit history and consistency of payment, the better your score.

Using credit to make purchases can be a helpful tool in your money management, but it can also be a major pitfall when used incorrectly.  Need help to dig out of debt? Visit the U.S. government Information Services for information to guide you: