This 26-year-old man paid off $10,000 in credit card debt.  Here's what new cardholders can learn
This 26-year-old man paid off ,000 in credit card debt.  Here’s what new cardholders can learn

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Tiffany Ferguson, 26, opened her first credit card with a local credit union when she was 18. Ferguson, a YouTube video creator from New Yorksays she opened the card to cover small expenses and start building credit.

But like many young adults, her life soon became expensive. She took on the cost of moving across the country for college, study abroad, and medical bills — as well as some excessive general expenses and the pressures of FOMO.

“I think financially I was not good at saying no to myself,” she says. Eventually, Ferguson racked up $10,000 in credit card debt over five years and five different cards.

She had to balance the growing payments with the limited income she earned as a full-time student. By the time her debt peaked, she says she was making about $20,000 a year.

“I would pay small chunks, like a few hundred here and there,” Ferguson says, but with such a high balance, she felt like small payments didn’t seem to make a difference. “Then another emergency or need arises, and then your balance goes up.”

Between her credit card debt and her student loans, Ferguson says she was overwhelmed with how much she owed. Here’s how she then got started fixing her debt balances, what she learned along the way, and her advice for any young adult just starting out with credit.

The path to debt repayment

Ferguson began his debt repayment journey by watching online videos on financial topics to help him learn good credit card habits.

But the biggest turning point came when she started supplementing her income so she had more money to contribute to her monthly card balances. She started creating her own YouTube videos, initially earning an average of $200 per month from her videos. Knowing that wasn’t enough to cover expenses, let alone pay off her debts, she began to wonder if she should get another job or a paid internship.

After college, however, Ferguson was able to focus full-time on his channel. By creating more content, she earned $75,000 in the first year, enough to start making bigger payments.

“That’s the only reason I was able to make a real jump on my debt,” she says. “When a bigger paycheck came in, I threw in as much as I could afford on one of the cards,” she says.

In addition to increasing his income, Ferguson also used a balance transfer to help eliminate his debt. She opened a balance transfer card with a local credit union and transferred $5,000 from her high interest card balances to the lower interest card.

She used a combination of debt repayment strategies: Ferguson started by paying off the cards with the lowest balances first, then the cards with the highest interest rates. Once she opened the balance transfer card, she began paying off her debt more aggressively. Even though the balance transfer card didn’t have an introductory rate of 0%, the interest rate was lower than his other cards, which still helped him save money.

After combining the balance transfer card and her increased income, Ferguson says she was able to pay off her balance in full within six months.

Reaping the rewards of good credit habits

When she started her journey with her credit card, Ferguson says she didn’t pay attention to her credit card benefits or fees, but saw it as a “necessity to reach the two ends”.

Since paying off her $10,000 balance, she’s been avoiding overspending, adopting good credit habits, and primarily using her cards to earn rewards for future savings. She still has several of her credit cards because they factor into her credit score, but now pays her balance in full each month and has accumulated all credit card debt ever since.

She has a few airline credit cards, to take advantage of bonuses and extra points for travel. And occasionally she will open a new card because of her benefits, programs or an attractive welcome bonus. But she still wonders if she can use it responsibly before applying.

“It’s a great feeling to be able to put my daily expenses on my card, pay them all at once or sometimes pay them twice in the same month,” says Ferguson. “I enjoy the benefits of this card, without paying the interest.”

What to know before getting a credit card

If you’re building credit or looking to open a credit card for the first time, here are some best practices to help you avoid debt and get the most out of your spending.

Estimate your monthly expenses

A credit card can be a great way to earn rewards on your spending, but overspending can hurt your credit and lead to high-interest debt. Before applying for a card, Ferguson recommends assessing your current spending habits, so you know what you can afford without going into debt.

Start with your regular payments, like medical bills, car insurance, streaming subscriptions, etc., to fully understand your monthly expenses. Consider reserving your card just for these expenses — at least initially — to practice using the card and start earning credit on purchases already in your budget.

Choose the right credit card for you

The right credit card can help you build good credit while helping you save on your most frequent expenses.

If you don’t have a credit history, some issuers consider other approval factors, like your banking information and monthly bill payments, to determine your creditworthiness. Another option for new cardholders is a secured credit card, which requires an initial refundable deposit that will serve as a line of credit and security for the lender.

Once you achieve a good score, you can qualify for more credit card offers with premium rewards and benefits. But even for starters, there are credit card options that offer valuable rewards and perks, including cash back, travel points, or welcome offers for new cardholders.

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  • Introductory offer:

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  • Annual subscription :


  • Regular APR:

    27.24% (Variable)

  • Recommended credit:

    (No credit history)

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Regularly review your expenses

When you’re just starting to build credit, one of the most important things you can do is focus on building good credit habits. Monitor your credit utilization rate and pay your balance in full and on time each month to help you build good credit and avoid debt.

Not only should you educate yourself on good credit practices, but also be sure to stay informed about your own balances. Ferguson remembers not looking at her statements because she didn’t want to see how little money she had when she was younger, but staying on top of your purchases can help you avoid overspending.

“It’s crucial to go back and review what you’ve already spent,” she says. “If you don’t look at your card [balance] for a few months it can swell so fast. And I think that often happens with young people.

Don’t consider your card limiting free money, says Ferguson. Instead, use your credit card to cover small day-to-day expenses while building your credit, and pay the balance in full each month.

Understanding your interest rate

When Ferguson got his first credit card, the APR was close to 20%. At the time, she saw interest as a necessary cost of the convenience of having a credit card, but didn’t consider how much it contributed to her debt.

“Over time, paying ten, 20, 30, 50 dollars a month in interest while you’re not paying off that balance is obviously where the problems arise,” she says.

Especially now, it’s even more important to keep your interest rate in mind. Interest rates are on the rise and experts predict that rates will continue to rise.

The best way to avoid interest is to pay your balance on time and in full each month. But you should also be aware of the amount of interest charged by your card. Before opening a new card account, review the terms and conditions to find out the current variable APR of the card, the date your payment is due each month, fees and penalties for late and returned payments , and other charges that may be added to any balance you carry. .


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