It’s Cyber Monday, and between today and Black Friday, chances are you’ve done a bit of online shopping over the last few days in preparation for the holiday season. Even more likely, especially for the famously destitute college student, is the possibility that you spent a little too much over the last few days, and ended up using a credit card in order to pay for that new iPad Mini or Samsung Galaxy S3, and will be doing so again as the days towards Christmas get fewer. But while the prospect of sky-high credit card debt is enough to make most people in our generation cringe, here’s how to make it a little more manageable.

Credit is Key

First off, don’t panic. While you should always use credit responsibly, an unfortunate truth of the world we live in is that we need credit. Whether its renting an apartment, buying a car or getting a mortgage on a house, your credit rating effects everything, and the best way to build credit is through intelligent use of credit cards. In a way, having some credit card debt during early adulthood is in fact better than having none at all, but the make-or-break difference is how you manage the debt.

Over the Minimum

Perhaps the most critical way to approach credit card debt is in how you approach the payments. While you can just pay the minimum amount every month without your credit being adversely affected, high interest rates will mean that you’ll be paying more off of over time as a result. A great way of approaching monthly payments is to see how much your interest rate is, and then make payments over that amount. For intsance, if you have a $40 a month payment, aim for paying just $10-$20 more a month. After a while, you’ll start to actually see your minimum monthly payments begin to decline as you chip away at your debt, and will be increasing your credit score in the process. And most importantly, pay on time.

Plan Ahead

Credit exists for a simple, important reason: money in an emergency. Unfortunately, not everyone sees it that way, and instead shift credit around It’s the flagrant and irresponsible reliance on debt, in which people spend vastly more than they can quickly pay back, that causes people to run into trouble. While credit card debt and living outside one’s own means have become somewhat synonymous, remember that so long as you’re using credit as a lifeline and you have a plan for how you’ll pay it back, borrow as you see fit.

As a quick example of this principle, I once found myself needing to take out a new credit card in order to cover the costs of moving one year. I knew I’d only be a couple hundred of dollars short in order to pay first and last months rent, but as I was just starting a new job, I couldn’t find the money anywhere. My solution was to get a Student Rewards card with ludicrously high interest rates and a $300 credit limit. I came close to maxing it out almost immediately, which is traditionally considered a definite taboo for credit card debt. But, the difference was that the moment I got my old security deposit, I paid it off in full and actually saw my credit score increase and my credit limit on my other card double. The lesson is this: borrowing in large amounts is fine, just so long as you have a realistic and quick plan for paying it off.

Lesser of Two Evils

If you find yourself with a few forms of debt, whether it be multiple credit cards or a combination of cards and loans, the priority should always be to tackle to the debt with the highest interest rate, not the debt of the largest amount. If you have a card with a small credit union at 8% interest, but another from a major credit card company at 16%, make sure your focus is on the latter, regardless of whether the actual debt amount on the first card is significantly more. While you’ll rack up some debt in the process on the other card, it will be far less exhorbitant than the interest you’d be incurring on the card with the highest percentage. Alternatively, if your interest rates are around the same amount, do the opposite: try making the minimum payments on all but one card/loan and focus on the lowest debt amount. Attempt to pay it off in full or make as big of payments as possible until its gone, and then use the amount you would have been paying in minimum to help work off the other debts.

If you’re in a pinch, the last-ditch method of managing debt is to shift it from one card to another with a significantly lower interest rate. Obviously, this is the most dangerous method of dealing with debt due to the short-term negative impact it will have on your credit rating as well as the possibility of it all eventually snowballing into an even larger debt if you don’t keep an eye on interest rates. But the truth is that this can be an effective way of avoiding just paying the interest on the debt you already have. But if you’re about to transfer your debt from a card with an 18% interest to a new one with an introductory rate of 0%, keep the following in mind:

  • Do a budget to compare how much you’d paying in interest for both cards.
  • Take note of transfer fees, and make sure that the amount you’d be paying in the fee is substantially less than you would’ve paid in interest on the other card.
  • Watch for when the introductory rate period ends and make sure the debt is paid before that time.
  • Also see whether you’re required to have a balance with the new card for a certain amount of time.
  • Check all the fine print and discuss it with your credit card companies for other caveats to get more money out of you.

Cut Out the Cards

Ultimately, the best way to keep debt at a minimum is to try and avoid using them altogether. As I’ve said before, you certainly should utilize credit cards as a means of building credit, but what person can say they’ve stopped using them once their credit score tops 800? The truth is that most people aren’t nearly as adroit at managing their finances as that, and continuously find themselves digging the same holes as before. So once the debt is gone, take your scissors to them and then consider using the amount you used to pay every month for your credit cards towards building a savings. That way, when a rainy day comes, you can actually have the satisfaction of paying for it all right away instead of reaching for a credit card.