Published: June 4, 2014 | Updated: May 21, 2020 | Posted by: Moneymax | Credit Card
Paying your credit card bills can be heartbreaking – it seems like a never-ending process and too costly, without thinking we benefited from it. But, paying it on time and in full will surely work wonders in such a way you comfort yourself with the upcoming stress and burden.
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Save yourself. For sure you don’t want your credit card company haunting you in the future. Here are ways to pay off your debt quickly:
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Before you pay all your debts, know where you stand. Acknowledge that and plan for your next moves. List down all your debts from all your credit card companies and plan from there. You’ll never hit your target if you don’t know where it is, so be brutally honest with yourself.
Make a list or table of your cash flow – determine your monthly spending versus your income. If the result comes back negative (i.e., spending is greater than income) you need to do a budgeting overhaul. You may consider minimizing your Friday gimmicks and daily lunch outs. Cut down your wants, even for the meantime, and focus more on what you really need during your repayment phase.
It’s going to be impossible for you to get out of your debts if you continue creating new ones. Leave your credit card at home or ask the bank if they could freeze them. Bear in mind that you need the financial peace of mind of having a debt-free life from now on. Stay committed to your promise.
Have you noticed why credit card companies put the “minimum payment required” on bold? Because they want you to pay that amount alone since it means more interest to them in the coming months. More interest to them means more debt on your part. If you pay more than the minimum payment or better in full, you will save more for interest charges in your next bills.
Pay the debt that incurs the highest interest rate. For instance, pay those that bill you 5% monthly interest rate, than with those with 3% or 2.5%. Focus your attention first on paying that debt, pay it off before even touching the other debts. The lower ones will still accumulate interest in the meantime, but since you’re paying with interest, might as well do it at the lower percentage.
If your monthly interests are the same, make sure to pay the minimum payments on all your debts but pay in full the lowest balance so it disappears quickly on your list. Make the same process of the second lowest and so on as all your debts are cleared. This process will make the repayment course bearable and also you could see and feel the changes.
Make use of promotional offers like a transfer-all-your-credit-card-balances-to-us-pay-a-lower-interest promo. Moving from an original sky-high 18% per month to 5% is worth it. But, take care and examine the offer closely for hidden charges. Always read the fine print.
It will be of great help for you if you find a community where you can share and hear financial successes and failures; they are good source of knowledge and support since you’re going through the same thing.
Credit card is an amazing tool only if you manage to use it properly. Discipline on spending will always be dependent on you.
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With a goal to help Filipinos lead healthier financial lives, Moneymax regularly publishes tips and tricks on personal finance and lifestyle, among many other topics. For more finance-related news and articles, follow Moneymax on Linkedin.