Getting your credit card paid on time and cutting down on the debt you owe can provide you with a lot of freedom. Here are some tips on achieving this.
- Pay a little extra to the bare minimum
Most credit card companies set the minimum repayment amount to 2 or 3% of the principal amount per month. Paying just the bare minimum means you are only paying off some of the interest, hence doesn%u2019t make a dent in the actual balance. Paying a little more than the set minimum can however help reduce the repayment amount significantly over time. You should start seeing the balance shrink as time goes by.
- Work with the least number of cards possible, preferably one
Dealing with multiple credit cards can be quite a challenge. It can become even harder servicing credit cards with higher interest rates too. To reduce the pressure, why not focus on one card, and pay off the rest as time goes by. Choose to remain with one card, preferably the low-interest ones, then ditch the rest. Consider closing accounts with the other providers to help you focus or use just one provider. If you have multiple payday loans and credit cards then try clear as many as possible.
- Put your savings to use
Although many will advise against this, using your savings to pay off a credit card or loan balance is a bold, yet wise move. If you come to think of it, the interest rates earned from your savings are way too small compared to what your credit card company charges per month. Although you may need to weigh your options first before taking this measure, using your savings to preserve your credit score or avoid defaulting a payment is recommended.
- Examine your spending
Take a step back to examine your spending habits to see how you could manage your finances better. One way to keep track of your spending is by having a written budget. Writing down your spending habits, or accounting for each coin you earn can help you free up some money. You can use the freed money to offset the credit card balance too.
While it may take a while until your credit balance is cleared, taking proactive measures to reduce the balances is just the first step. The earlier you can get this done, the sooner the balance will be cleared.
- Consider balance transfer
Most financial institutions offer/allow balance transfer at low interest rates. You however shouldn’t take any of these institutions deals until you have read the fine print. Some companies will offer you a sweet deal only for it to blow on your face once it is done. To avoid nasty surprises, check the terms and conditions of each agreement before signing one.
- Always go for low-interest credit cards
Credit card rates on CANSTAR’s database range from 7.99% to 23.5%, with the rates skyrocketing for cash advances. Using a low-rate credit card can save you thousands of money at the end of each year. Unless you are on the cheapest option out there, it’s probably best you started shopping for an affordable alternative. The lower the interest rate, the faster it will be for you to clear the debt on time. Be sure to read the fine print first before signing a deal that seems too sweet.
The table below shows a preview of some low-rate credit cards as shown in CANSTAR comparison charts. You can also use other credit comparison sites to find out how much you will be paying to particular providers in interest rates. A little window-shopping and research are also needed to be able to land a good deal. Nevertheless, following the tips and tricks outlined above should help you get out of debt fast, and even manage your finances better.