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What to do about your credit card debt right now

It can be hard to know what to do with credit card debt at a time like this. But with the coronavirus pandemic building in Australia right now, everything feels a little bit up in the air.

We’ve seen further government restrictions and more volatility in ASX shares. We’ve even seen a strong rebound from the S&P/ASX 200 Index (ASX: XJO) to close out the week.

Here are a few things to keep in mind if you’re wondering what to do with that negative balance on your credit cards right now.

Stay calm

It’s been a nervous few weeks for most Aussies, and Fools invested in the share market might be wondering what’s going on. Leverage can be a wonderful thing in some instances, but it can also mean that your credit card debt is making you anxious right now. It seems like we could be headed towards a recession in Australia and around the globe. But that doesn’t mean that personal debt has to get the better of you.

It’s worth taking a deep breath amidst all the panic. There are some things that are in your control and some that are not. Once you’re in the right headspace, you can start tackling those debts in the right way.

Create a step-by-step action plan for your credit card debt

It’s best to think these through step-by-step to get some perspective and develop an effective plan. There are signs that the Aussie banks are looking to show leniency in these trying times. It may be that you can get a balance transfer to a 0% credit card to tide you over.

The economy will recover from these hard times as it has done in the past. Evaluating all options and tackling the issue early could mean that credit card debt doesn’t weigh on your mind or your lifestyle for longer than it has to.

Reduce your spending

While everyone’s circumstances vary, many of us could reduce our spending in various areas of our lives. With so much uncertainty in the markets, it’s probably not the best time for discretionary spending. There are services such as Afterpay Ltd (ASX: APT) which could be useful to break any required spending into a manageable schedule.

Seek out help if needed

While looking for advice is a great start, there are other resources that can help. If you’ve got a large credit card debt and don’t know where to start, consider looking at ASIC’s MoneySmart or the ACCC’s debt help webpages.

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Motley Fool contributor Ken Hall owns shares of AFTERPAY T FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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