New Beginnings: Doing Away with your American Express Balance

Most people have no intention of being buried in debt when the get a credit card. They tell themselves, “It’s only for emergencies.” But almost each and every time, that person ends up struggling underneath a mountain of debt they can’t seem to find their way out of. If this sounds familiar, know that there is hope. Here are a few ways you can begin to do away with your American Express balance.

1. Call and ask for a lower interest rate.

One of the most difficult parts of paying off a credit card is the high interest rate. If you’re only making the minimum payment, you’re barely scratching the surface of the actual balance. Even one or two percentage points can equate to hundreds of dollars in savings over the long-term. While there’s no guarantee the issuer will offer a reduced rate, all it takes is a simple phone call to find out.

2. If you’re working with extremely limited funds, make two minimum payments per month.

Credit cards tend to charge interest based on the day-to-day balance. While you should be striving to pay more than the minimum payment whenever possible, it’s perfectly acceptable to make two minimum payments each month. The more quickly you’re able to pay off parts of your debt and reduce the amount the interest is applied to, the more you’ll save.

3. Create a budget.

If you’re struggling with debt, you need to be aware of where each and every penny goes. Are you spending money on items you can do without? If you find you’re eating out more than once or twice per week, you could cut back that amount and put more money towards paying off your debt. By taking stock of your expenses and learning where the bulk of your payments are going, you can create a coherent budget that will allow you to whittle away at your debt without taking money away from other important tasks.

4. Pay with cash, not a card.

When doing your day to day shopping, always try to use cash. The psychological effect of watching your money disappear will prevent you from spending as much as you might if it were only credit. Researchers have found that people who use credit cards are likely to spend over 20% more than those who paid with cash, due to the fact they drew no correlation in their minds between the amount of money they had and the cost of the item they were purchasing.

5. Track your progress.

Paying off a debt can be discouraging. While you’re doing it to give yourself more freedom and allow you to have the lifestyle you really want, it costs money in the process. By tracking how much you’ve already paid off, you can see the debt slowly disappearing. This will provide the motivation and encouragement you need to keep going until it’s completely paid off.

6. Pay attention to your spending habits.

It does no good to pay off your American Express balance only to take it all back a few months later. After you’ve eliminated your debt, take steps to prevent it from happening again. Only purchase items you can back up with a debit account or with cash. If you need a credit card to purchase something, try to avoid it — impulse purchases are one of the main ways people fall into the trap of debt.

Although it takes time, it isn’t impossible to wipe out your credit card debt. If you have multiple cards, focusing on the primary one and paying it off first can be helpful. Once that amount of your budget is open, you can refocus it on another card, working your way down until you’re no longer in any sort of debt. Following these six steps can provide you with a good base to work from.