Credit cards have become a normal mode of transaction for most people today as it easily allows purchases regardless of whether money is credited into your account or not. Although settling amounts in full regularly every month can ensure a decent credit score, anyone holding a credit card should exercise caution. This is because credit limits offered by credit cards promote a culture of casual spending and before you know it, you might be looking down the barrel of debt. Anyone who’s been through this downward spiral understands the debt trap that comes alongside a casual approach to credit card spending.
So here we go, with five tips to pay off your credit card debt faster:
- Transferring debt
A few banks give personal loans at cheaper rates which can be used for paying off debts in a systematic fashion. Take a similar route by moving the balance to another credit card. There exist banks providing negligible or 0 interest in the initial period, after which standard rates apply. This option is suitable for people who are stuck in a bad web of debts and have little leeway to experiment with.
2) Prioritize your payment cycle
Settle debt of the credit card with the highest interest rate first. For eg. In case of a debt of Rs. 10,000 from 2 bank cards, it is prudent to focus on settling money for the card with the higher interest rate. This ensures you will spend relatively lesser. Your outgoing interest amount will decrease as those outstanding amounts would attract higher interest over time.
- Generate Extra income to pay more
Every once in a while, look at stuff in your house that you can sell or any other asset that you can liquidate to pay off a chunk of the debt. Any savings from the previous month can be used as well in this regard. Always make sure the payment is more or way more than the minimum asked by the credit card company. Actively minimizing expenses shall work in your favor.
- Talk to your credit card company
While this tip is often brushed aside by many as people are apprehensive of any cooperation by multination corporations like banks, that is not the case. If you are in a real tough situation, explaining your situation to the credit card company can get your interest rates lowered. It’s advisable that you speak to a manager and mention your loyalty with the bank if you have been a customer for years.
- Be on top of your Billing cycle
Information will empower you to finish your debt quicker.
A)Plan purchases to take full advantage of your credit-free period.
Say, your billing cycle begins on the 15th, make sure you don’t make any purchases on the 14th as it will give you only one day of interest-free period whereas purchases made on the 16th will give you a longer interest-free period. Thus, planning your purchases accordingly would be an intelligent step.
B)Also look at the auto-payment facility offered by your credit card company. This will ensure you never miss a payment. Breaking the amount down further week-wise or fortnightly may be a good idea if you don’t feel that is too cumbersome.
These tips can surely set the tone to pay off your credit card debts much quicker. An organized effort that is goal-oriented will lighten your debt-load steadily over a period of time. We wish you good luck to conquer your debts paving the way towards a much more financially sound situation.