 Hi everyone, my name is Nika. Welcome back to my channel. This is Hi Black Girl, a channel where we talk about all things beauty, skincare, you know, all that fun stuff. But then also personal finance, because I feel like what a lot of people don't talk about is like beauty can be expensive. Like, keeping up with yourself as a woman is, it costs, you know, your nails, your hair, your skincare, everything. So I like to just try to help girls be like as financially responsible as possible so we can look cute, you know, while we're doing it. So welcome. If you're new here, please subscribe. If you're a returning user, welcome back. Today's video is going to be all about credit card debt. So I'm going to break it down to three parts to have my notes here. The first part is why is credit card debt bad, followed by how do people like get in credit card debt. And then lastly, it's going to be how to get out of credit card debt. So if you're interested in one section in particular, go ahead and skip to that part of the video. Otherwise, stay tuned, buckle in, and we're just going to get right into it. I am also a side note. I'm going to ramble a little bit. I just did these braids myself because I did not feel like paying $300 to get my hair done. And I'm like really part of myself right now. So if I'm touching my hair a lot, that's why. But yeah, let's get right into it. So why is credit card debt bad? So opposite to what people may tell you, having a balance in your credit card doesn't actually help your credit score. When I first got a credit card, I was told and taught that having a balance in your credit card was a good thing because it helps increase your credit score, but that's false. What really goes into your credit score is your credit utilization, which is you don't kind of a balance in your credit card, but you want to keep that low. So you want to keep that, I want to say under 30% and the lower it is, the better. So having actually like a rotating balance. So by rotating balance, what I mean is like you run up $500 on your credit card and then the next billing cycle, you pay that entire thing off in full. So that's truly what your credit bureaus are looking for, like how responsible you are with your credit card debt, but that's not what the banks want. So credit card debt is really bad because that's how banks make a lot of money and that's why they are so excited to give a bunch of 18 year old credit cards because essentially they make all their money off of interest on these credit cards. So let's say if you have a $100 balance on your credit card and your interest rate is like 20%, the math, I don't know. But your next statement balance, if you like roll it over, it's going to be like $120, right? And if you just pay the balance, it's going to keep rolling over until it's like $140, $160. The math there is not perfect because math is not my strong suit, but you get the idea. They are making money because you're not paying them back. So you could have initially borrowed like $100 and then by the time you actually pay your credit card off, like 6, 8, 12 months later, you've ended up paying the bank like $250 off of that initial $100 on purchase. So that is why banks love people who don't pay their credit cards off in full and that's why when they see, you know, you're not paying your credit card off, they're like chaching because banks have like the highest rates of interest. Like I use 20% as an example, but I would say even when you have a good credit score, like the lowest, the lowest your credit card interest is going to be is like maybe 15% or 17%. And then upwards, like if you have a bad credit score, they could literally rob you like 25 to 27% on credit card interest. And that means basically if you don't pay it back off of the initial amount of money you borrowed, you're going to pay 27% interest like worst case scenario. And that's really fucked up to truly like put that into perspective, like think about how much money you make an interest on your savings account. So I am a huge fan of high interest savings accounts. Actually, I wrote a blog post about it and I will link that in the video. But like if you have the highest, the highest like interest rate that a bank will give you for saving money with them, it's going to be like 1%. And it's the same principle, right? So if you save $100, they're going to give you 1%, which is like a dollar. And then, you know, you'll have $101 where they're basically paying you pennies to save your money with them. But if you're borrowing money for them, then their interest rate is like 20%, like insane. So that is basically why credit card debt is really bad. It's like one of the highest interest rates that are in the market right now. You know, like other financial tools don't have interest rates that high. Even student loan debt, you know, your interest rate, if you went the government route, it's likely going to be somewhere between like 5% and 7%. I'm sorry if you guys can hear my cat in the background, but yeah. Just think about that. Like you borrow from the government, you have a 5% interest rate, you borrow from a bank and your interest rate is 20%. That's like insane. The next topic is how do people get in credit card debt, which is honestly the saddest thing because a lot of people get in credit card debt. I'm like stupid, like everyday items, right? Like just living their lives. Like I right now, I am in credit card debt and I actually shared my story and I'm sharing my debt free, like kind of payoff journey on my Instagram. So if you want the latest and greatest on that, follow me on Instagram. But right now I started about $9,450 in credit card debt. I currently, I just made a payment $450, so it's $9,000 right now. And by the time this comes out, I should probably be at like 8,500. So if you want the latest and greatest on that, follow me on Instagram. But otherwise people, back to what I was saying, people typically get into credit card debt just like on everyday items. Like if I knew I was going to be like $9,000 in debt, I wish I had like a Birkin to show for it. I have nothing. So typically a lot of people find themselves in credit card debt, not because they bought like super luxurious things, but because they're just not budgeting correctly. So if you are spending more than you're making, you're going to have a deficit, which is going to lead you into credit card debt. A lot of the common mistakes is like reallocating money or not allocating money appropriately. So I know for me personally, I had a really large bill that my company reimbursed me for. So I took like a bunch of people out for drinks. It was a qualified work expense. My company reimbursed me for that money. But honestly, instead of paying down my credit card bill, I chose to save all that money because it was really important to me to actually meet my $20,000 savings goal and I valued that over debt. So we all make our own decisions. It's personal finance for a reason, but just be aware. If you are going into debt for something, make sure you're making the right choices with your money. For example, if you are looking to save on everyday items, can you buy the same brand of aluminum foil, paper towels, toilet paper at a less expensive savings mart or dollar store rather than going to Target or a Walmart? I don't know. All right, so how to get out of credit card debt. So we talked about why credit card debt is bad. We talked about how people get into credit card debt. It's a scam. The credit card companies do this on purpose. They don't even debt. So how to get out of credit card debt, which is honestly the meat and potatoes of this video, right? So you find yourself in credit card debt, you're looking at your American Express bill and you're seeing every month, they're charging you like $300 a month in interest. That might be an exaggeration, but I do feel like my interest on my account was like up. It was like $100, like an extra $100, $200 a month. And the longer I kept that debt with American Express, the higher the interest rate is going to be. Because again, like we said in the beginning, why is credit card debt bad? Because they have this high interest rate that accumulates. So the longer you have the debt with them, the higher the interest and fees you're going to pay on it is going to be. And so that's how people really snowball into debt. So the first thing you need to do when you're in credit card debt is stop the bleeding. So if you need to be super dramatic and like freeze your credit cards or like cut up your credit cards or like just hide your credit cards from yourself, do it. There's like truly no shame in that. I've been there, I've done that. I've been like, okay, I'm going on a debit diet. Like I'm not using my credit cards anymore. That's the first thing to do, right? We need to get you back onto like a cash diet. We need to get you back within a budget. We need to get you back on track to live within your needs. Live within your means. I kind of don't like that word, but that's a different video. But we need to get you back to living within your needs and taking into account that you now need to pay off this credit card debt. So you do have a few options when it comes to just looking at my notes here. You do have a few options when it comes to paying off credit card debt and I will kind of go through the three of them now. So the first option is getting a personal loan. The second option is doing a balanced transfer credit card. And the third option is bankruptcy. I don't really know anything about bankruptcy. Never done it. So I'm just going to scrap that option. But it's an option if you are seriously considering it. You don't feel like there's any way you can pay your debt off the next two, three, four, five years. Like it's a wrap for you. That is a viable option. And you should check that out because credit card debt is like, you can write off credit card debt in a bankruptcy versus like student loan debt. Even if you declare bankruptcy, like you still have to pay that back. So if you do have a lot of credit card debt and you don't think you'll be able to pay it off in like the next five years, like that's a viable option for you. The two options that I'll talk about a little bit more at length are number one, the personal loan and then number two, the credit card balance transfer. So number one, a personal loan. This is something that you'll also get from a blank, but personal loans interest rates tend to be a lot lower than any credit card interest rate ever will be in life. And the better your credit score, the lower the interest rate it's going to be. So for example, I had a personal loan offer. The interest rate was around 7%. And I could take out like literally the full amount of my credit card debt. So that way I would pay off my credit card debt, stop the bleeding there. Now I would have a 7% interest rate on my loan that I would pay off and pay off the credit card debt that way. So that's a solid option. And one that you should really look into if you have like a good credit score. Even if you don't have a good credit score, you could still probably get a personal loan. Your interest rate would just vary. But the number one thing you should look for, you want to make sure your personal loan interest rate is significantly lower than your credit card debt interest rate. Another thing when it comes to personal loans, you will have like a fixed monthly payment. So you have to, you have to, you have to, you have to pay this off. Basically like every month is probably going to be the same amount. Like based on your term, right? So you might have a personal loan for six months, 12 months, 24 months, whatever you have. I would highly recommend getting something that's the longest amount possible. So if you're able to pay it off early, that's great. But recently, like if nothing else changes, you foresee it. You seriously like can see yourself paying it off and like that 24 month period. So the next option is my favorite option. Honestly, and that is a balanced transfer credit card. I like these options better because it's like a zero interest rate. Yes, you heard me. The interest rate is zero. And so that's like honestly my favorite way to go down. You do have like a 5% initiation fee. So my student loan debt was originally like 9,000 is the amount that I wanted to transfer, but I had that fee. So it brought the balance to $9,450. And so now I'm just paying that off that way. But what I really like about banal transfer cards is that one, they are really good for people who have good credit scores to you can like kind of shop around. So I saw some that were for 12 months, 16 months. And I chose the one with the longest runway, which was 21 months. And then I just kind of divided my debt over that 21 month period. And I saw that I would be making payments of like $450 a month in order to pay it off in 21 months. Ideally, I would like to pay it off sooner and there's no pill and tea for paying it off sooner. Sometimes with personal loans, there are penalties for paying it off sooner. So you want to like read the fine print there. But for credit card balance transfers, it's basically like the same thing with my balance transfer credit card. I do not use it. I don't use it. It literally sits in a drawer in my bed. I never touch it. Like I am truly using it as a vehicle just to pay off this debt. So yeah, don't if you feel like you're going to get another credit card and then you're going to you're going to transfer the balance and then that you're also going to max out that credit card. Don't know get a personal loan. It's not worth it if you don't think you have like the self control. So yeah, I mean, that's kind of it. Did I miss anything? Oh, of course. The number one thing to get out of credit card debt is you need to just make more money. That's the long of it. That's the short of it. You need to make more money. So when I am kind of in the midst of doing right now is interviewing for different jobs, trying to get a nine to five that pays me more. Another alternative is to side hustle. So I'm also a yoga instructor. And so I teach yoga on the weekends and sometimes on the weeknights as well. But that has really helped me kind of get out of debt. And that was something that I had to put an initial payment on. I want to say my yoga teacher training was like $2,800. But it's really been worth it because it's just given me like such flexibility to pay off my income because pay off my income. Pay off my debt because I can pick up extra shifts at studios and things like that. And it's really easy for me to make more money with yoga. And like God forbid I lost my nine to five. I now have like a second line of income that like if I needed to teach yoga full time, it wouldn't be an issue because I already have a relationship with a second employer. Looking at my notes here. Oh yeah. So that's about it. Like to get out of debt. One, you want to create a debt payoff plan either by doing a personal loan, a balance transfer transfer or if bankrupt sees your thing. If it's looking real bleak, like got to do what works best for you. Two, like I really think you just need to make more money. Whether that's getting a new nine to five job, a new full time job or like doing some side hustles like yoga in my case. Or if you want to do like Uber, like what have you. Yeah, I think that's it guys. Let me know in the comments if I missed anything or if you have any other questions. I'm more than happy to help. Remember to subscribe to my channel for more videos. And yeah, I will talk to you guys next time. Bye.