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.
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.