Take advantage of spring cleaning and start decluttering your debt! 

If credit card debt keeps you up at night, you are not alone. In 2018, the average American had a credit card balance of $6,375. That’s up nearly 3 percent from the year before. Additionally, the 2017 Experian State of Credit stated that:

• Minnesota has the highest credit score while Mississippi has the lowest
• Gen X have the most credit card debt while Generation Z has the lowest credit score
• Credit card debt has hit a record high
• Millennials are getting into mortgage debt

The mental clutter of debt can be overwhelming. Consider decluttering your debt while you’re spring cleaning and decluttering your home. Here’s how that could help you move forward financially:

Stop Using Your Cards

If you’re dieting by cutting down on carbs and sugars, would you keep cake and candy at your house? The same concept applies to credit card debt. Even though it sounds like an obvious benefit to cutting your credit card, not having the plastic at your fingertips prevents you from increasing your debt and digging a bigger debt hole.

Stop Paying High Interest Rates

The more you use your credit card the more interest you’ll pay, bringing your overall debt up and making it harder to pay it off. If you owe $6,000 on your credit card with a 14% interest rate and a plan to pay off that debt in 18 months, you’ll end up paying $994 in interest. Use this credit card payoff calculator from Bankrate.com to see how much you’ll end up paying if you keep using your card. Remember, if you have a credit card without a fixed interest rate, paying off becomes even harder.

Develop a Realistic Budget

Getting rid of your credit card will force you to develop a budget because cash and/or your debit card will be the only way to pay for the things you need and want. Even though it might be hard at first (it will be), you will benefit long term and you’ll joyfully watch your credit card debt decrease. Click here to learn more about personal budgeting with LendingPoint.

Improve Your Credit Score

Did you know that credit card debt accounts for about 30% of your credit score?  According to The Balance, “The level of debt, the second biggest factor that affects your credit score, is referred to as your credit utilization, which is your credit card balances compared to your credit limits. A lower credit utilization is better because it demonstrates you can responsibly use credit and that you haven’t overextended yourself with high credit card balances. Lower credit card balances compared to your credit card limits will reward you with higher credit scores. The opposite is also true. Higher credit card balances will lower your credit score.”

If you’re able to reduce the amount of outstanding credit card debt you owe instead of increasing it every month, your credit score will eventually increase. Decreasing your debt-to-income ratio while increasing your available credit reflects favorably on your credit report.  Click here to learn more about how your credit card balance affects your credit score.

Refinance with a Personal Loan

You may want to jump start your debt decluttering by utilizing a personal loan which will provide you with one monthly payment, a fixed interest rate, and a final payoff date. LendingPoint has loaned more than $1 billion to customers looking for a better way to manage and pay off their debt. 

Even though there are pros and cons to credit card refinancing, you should always explore your options and make sure you avoid missing payments, which could further hurt your credit score.