Like many Americans, I had a period of my life when I was in credit card debt. I was a young adult, and I had just started freelancing, so I wasn’t used to having an unstable income. I also wasn’t earning much, which meant I had little room for error with my spending.
Eventually, I got out of debt. But it took much longer than it should have and cost me hundreds of dollars in interest. If you’re in credit card debt, here are the three mistakes I made so you know what to avoid.
1. Not using a balance transfer card
A balance transfer card is a type of credit card specifically for paying off debt. It has a 0% intro APR on balance transfers, meaning debt you bring over from other accounts. For example, you have a credit card with a $5,000 balance and a 23% APR. You transfer it to a card with a 0% intro APR for 18 months, saving over $1,100 in interest per year.
I didn’t get a balance transfer card. In fact, I didn’t even know this type of card existed. If I had gotten one, I could’ve transferred over my credit card debt for a small balance transfer fee. The standard fee amount is 3% to 5%. Then, I could’ve paid it off faster and without expensive interest charges.
Avoiding interest makes it much easier to get out of credit card debt. Click here to learn more and see our list of the best balance transfer cards, with 0% intro APRs lasting as long as 21 months.
2. Continuing to use my credit cards
The most efficient way to pay off credit card debt is to stop using your cards. If you keep using them, it slows down your progress. Making a $500 payment could take a solid chunk out of your debt, but not if you spend another $400 on your cards that same month.
Keep in mind also that every purchase you make is more interest you need to pay. Even if you get a balance transfer card, the 0% intro APR might only apply to balance transfers and not new purchases. If so, you’ll start getting charged interest on purchases right away, even if the debt you transferred to the new card is interest-free for the moment.
I made the typical rationalizations in my head for why I was still using my credit cards. It was more convenient. I didn’t want to keep track of how much was in my checking account. I was earning points (which didn’t come close to equalizing the interest I was paying). They were all just excuses that kept me in debt longer.
3. Splurging after making progress on my debt
My income fluctuated quite a bit during my early days as a freelancer. I’d occasionally have a much more profitable month than usual. When that happened, I’d take advantage and pay down a large amount of debt.
So far, so good. But then I’d figure that since I had worked so hard and made so much progress, I deserved to treat myself. I’d splurge and feel happy about spending money — which turned to disappointment in myself when I saw my credit card bill a few weeks later.
When you’re dealing with credit card debt, you need to be extra disciplined about your spending. It’s not the time to splurge or make impulsive purchases. Focus on your goal of paying off your credit cards. If you want to occasionally treat yourself to stay motivated, that’s fine. But look for ways to do it without spending too much, like going out for happy hour with friends or grabbing a treat at a local bakery you like.
My credit card debt is firmly in the rearview mirror at this point. I’ve used many of the top credit cards since then, but I always pay in full every month, ensuring I get their benefits without the costly drawbacks. The mistakes I made didn’t ruin me financially, but I would’ve had an easier time had I known what not to do.
