Credit cards. We love them when we need them, but hate them when our monthly bill comes. Have you ever tried to pay off your credit card? If so was it a success or epic fail? I’m a prime example of how overspending and under managing your money can lead to hundreds of thousands of dollars in debt. But that’s all in the past. I’ve paid off a lot of my debt and am on my way to becoming debt free. Today I’m sharing the secret of how I did it.
Here’s how to pay off your credit card sooner than later:
Use a balance transfer
Some people think that balance transfers are a scam to get new clients to apply for the credit card. Although that may be true, balance transfers can also be very helpful if you use them correctly. The key is to read the fine print.
High interest rates can make paying off your credit card much harder and longer. Transferring your credit card balance to a new card with a zero or lower interest rate helps pay off your credit card sooner. If the low interest rate is available for six months then make sure you pay off the balance within that time period, otherwise the interest rate could skyrocket.
Consolidate your debt
It’s much easier to pay, manage and track one monthly payment than it is several payments on different credit cards. Consolidate all your debt onto the credit card with the lowest interest rate and watch your debt get paid off a lot faster.
Make larger payments
Minimum monthly payments never helped anybody. They may keep your credit score in good standing, but high outstanding balances are counterproductive because they harm your credit score. It’s just simple math, the more payments you make the faster you will pay off your credit card.
Make more frequent payments
Interest on your credit card is calculated daily and tallied up at the end of the month so waiting until you receive your monthly bill could be costing you big time in the form of high interest payments. It’s much better to make payments weekly or biweekly. I like to schedule debt payments that coincide with my pay schedule, that way I continuously keep paying off the balance and save on interest charges.
Stop spending
I know this is easier said than done, but once again it’s about the numbers. There is no point in making payments to your credit cards if you keep spending. Leave the credit cards at home and stop spending until your balance is at zero. Once your debt is under control you can start spending again – within limits of course.
Create a debt free plan
Becoming debt free is hard, it takes planning and discipline. If you truly want to pay off your debt sooner than later, it’s a good idea to create a debt free plan with affordable monthly payments and a debt free date. Paying off debt is like going on a diet, you need to make cuts and work harder if you want to achieve the results.