Wrangle in credit card debt with the $20 rule

For as often as credit card debt advice can be simple or confusing, there are times when something new and practical comes to light. That’s exactly what the Consumer Financial Protection Bureau has done. It recently released a three-step worksheet that people can use to help get their credit card spending under control. Here’s an overview of the CFPB plan:

Step 1:

“Look at last month’s credit card bill”

  • Circle all the times you swiped your credit card for less than $20.
  • Add up the total amount you’ve spent on these small purchases.
  • List the times and places you used your credit card for small purchases.
  • On that list, circle the times when you could have paid cash instead.

Step 2:

“Create a rule to live by to help you control your credit card debt”

  • Write out a rule that dictates at which dollar amount you will use cash instead of a credit card.

Step 3:

“Make a promise on yourself – and take action on your rule”

  • Sign the worksheet and make a commitment to the rule you set.

Follow your new $20 Rule to keep small charges from adding up to big debt. The CFPB reminds readers that “unless you pay your full balance off every month, interest and fees can add about 20 percent more to the cost of an item for average credit card customers.”

Travis Credit Union offers free financial counseling to its members with credit card debt issues via our BALANCE Financial Fitness Program or learn more by downloading the CFPB’s document.

BALANCE Financial Fitness CFPB plan