Is it Best to Get the Lowest Interest Credit Card?

There are lots of different credit cards to choose from and when you are choosing one then there will be reasons for choosing particular cards over other ones. Most people will focus a lot on the interest rate though. They will want to make sure that they have a card which will give them a decent rate so that they will not have to pay so much for using it. However, this will not always be the best choice for everyone as it will depend on the way that you use your card.

If you Only Repay the Minimum

if you only repay the minimum balance on your card each month, then you will be paying interest for a long time. You will be repaying the interest each month and perhaps just a little bit extra to cut down what you owe just a little bit. This will mean that you loan will hang around for a long time. If you keep spending on the card, then it will last even longer and it will mean that you will be paying interest for a very long time. If you are in this situation then you will want to make sure that you are not paying more interest than necessary for the things that you are buying. Therefore, it can be a good idea to keep the interest rates as low as possible and then you will not be paying so much in interest. Interest rates vary between lenders and so it is a good idea to keep comparing them. It is possible to transfer the balance of credit card to another one and so this might be something that it is worth doing inf they have a significantly lower interest rate. You will need to check the terms carefully though as there might be a different interest rate for those who are just taking out the card, compared with those using a balance transfer. Get in touch with the card issuer and find out first.

If You Always Repay the Full Balance

If you always repay what you owe each month on your credit card then you will not really need to worry that much about the interest rate. You will not be paying interest on the credit card and so it will not be relevant to you. It might be better to have a look at other features which might benefit you instead. Things like looking at cash back cards might be worthwhile as you could make some money back on the card. These tend to be higher interest and so it will not matter if you use them as you will not be paying interest. You may also have preferences over which card issuer you like and by not having so much concern about interest rates you will be able to choose between them all. However, it is still wise to keep a check on the interest rates. This is because you may find yourself in a situation where you will be unable to pay the credit card and then the interest rates could be important to you. Hopefully this will not be the case and if you have an automatic payment to always repay your full balance each month, then there is no chance that you will forget to repay the card and so it will be much harder to not repay it in full. Try to also keep a check on what you are spending so that you do not make the card unaffordable to repay. It can be wise to check the balance a few times in the month so that you can watch out for this.

How to Pay off Your Credit Cards

Most of us will have a credit card as they can be extremely useful. However, if we start to build up a lot of debt on the cards then they might become a cause of stress to us or just very expensive. This is because if we do not repay our credit cards in full each time we get a statement we will be charged interest on what we owe. The interest rate on a credit card can be high compared to other types of lending as well and so we could end up spending a lot of money. Therefore it can be a good idea to think about making sure that we repay the cards as soon as we can.

Stop Using Them

It can be wise to stop using the cards for a while, until you have them paid off. This will mean that you will not keep adding to the debt. If you do this then as you pay some off you will spend it again and you will feel really demotivated and you will not succeed at repaying the card. You may find that you really need or want to use the card for a few specific purchases perhaps for security reasons. Do this if you have to, but do not use it all the time for everything that you buy.

Do Not Just Pay Back the Minimum

It is very important to make sure that we at least repay the minimum on our credit card. However, we want to try hard to pay back more than that if we can. This is because we will find that if we only repay the minimum, we will tend to only cover the cost of the interest and a tiny bit more and it could take years to repay the credit card if you leave it like this. Then you will paying interest payments every month as well. Therefore, it is much better to repay more than the minimum. In fact, it is best to repay everything that you spend each month and then you will never pay interest. So, once you have cleared the outstanding balance, change your monthly direct debit to repay the whole card balance each month. You will have to be careful with your spending to make sure that you will be able to afford this every time.

Prioritise Repayment

You will need to make sure that you try hard to repay the credit card. This means that you will need to prioritise paying it off over buying other things. Of course, you will have essentials that you will absolutely have to continue to pay for. Things like food, bills, loan repayments, contracts etc will all have to be paid as well. So, make sure that you cover those but then you also pay for the minimum on your credit cards. Then use any spare money that you have to pay extra off the card. Of course, you may not have much left, depending on how much you earn and what financial commitments you have so you may need to try a few things to help you to get more money.

To start with it can be worth checking to make sure that you are not paying too much for the things that you are buying. Most of us will buy a lot of things and we do not necessarily check the prices of all of them. Therefore, going through everything and seeing if we can reduce the prices will be really useful. Look at the higher cost items first, such as insurance, utilities and contracts. You may not be able to reduce them immediately as you may be tied in, but once your current deal or contract ends, make sure that you look around thoroughly to see if you can get it cheaper. If you do this for everything you are buying, you will spend a lot less money without going without anything and you will be able to use that extra money to pay off your credit card.