Your credit card debt, especially if it’s high, hurts your credit score. Consequently, your ability to get approved for new credit cards is also damaged along with your chances of scoring any needed loans. This is why it’s important to know how to use a credit card wisely, but sometimes debt is something you can’t control.
Below, we have listed tricks to paying off credit cards. The sooner your credit cards are paid off, the sooner you can relax about your finances.
1. Stop Charging on Your Credit Cards
One of the first ways you can help yourself is not to view your credit card as a source of “free money.” Begin viewing it as a “liability” and recognize that any more money you take from it is more debt. Restrain yourself from using your credit card, preferably not at all.
In some cases, you can call your bank company and get a hold of a manager who can authorize a suspension of your account to avoid any further fees or charges from being added. Also, once you deactivate your credit card, arrange for an affordable payment plan until you can completely pay off your credit card debt.
The main focus of this tactic is to avoid tacking on any further debt and begin focusing on getting yourself out of your current debt.
2. Pay More Than Minimum Balance
If you pay only the minimum balance, it’ll take you much longer to pay off your bill. Whereas if you pay more, you’ll have less to pay in interest in the long run. Always save and pay more than you have to when it comes to your finances. After all, it’s better to have more than enough versus not enough.
When you’re able to, pay whatever extra you can each month. Every dollar and penny that goes over your minimum payment is given toward your balance and will let you save potentially hundreds in interest. Remember, the smaller your balance, the less interest you have to pay.
3. Pay a Lump Sum With a Windfall Tax Return or Bonus
A windfall is a large and sudden financial gain. It can be an inheritance, lawsuit settlement, salary bonus, etc. It’s wise to consider how to properly invest a windfall as it can mean financially finding peace of mind. This is one of the rare but effective tricks to paying off credit cards sooner rather than later.
Carefully consider what’s the best choice for your sudden increase in funds. With a logical financial plan based on your personal goals, you can ensure your money is not wasted.
If you wish to pay off your credit cards, now would be one of the best times to do so. You can also seek professional advice in doing this. While windfalls may be nice, you should treat each one as though it’s the last so you can get the best use out of it.
4. Pay the Highest Balance Card First
By prioritizing your debt with the highest interest rate and paying that off first, you save money. You can also redirect the remaining funds to other financial goals. Typically, you always save money by getting rid of high-interest debt as quickly as possible.
To start, make a list of your credit cards and rank them in order from highest to lowest interest rate. Then, pay off the credit card with the highest interest rate by making high lump-sum payments each month to that chosen card. Once this card is paid off, go to the next card with the next highest interest rate and continue this pattern until all your credit cards are paid.
This trick to paying off your credit card will take you less time and allow money to be saved from charges, especially if your highest interest rate credit cards have higher balances.
5. Utilize a Balance Transfer
Depending on a few factors, balance transfers can help or hurt your credit score. It’s a matter of knowing what you’re doing and how to handle your finances.
If you transfer your balance to a new card with a lower interest rate, a bigger portion of future payments can go toward paying down principal instead of interest. This enables you to pay off your balance more quickly and potentially save you a significant amount of money in the long run.
Once you’ve been accepted for a balance transfer card, you can begin the transfer of your balance from your former card. Normally, a balance transfer takes around two weeks. Take note, however, that during this time, you still have to make payments you owe to the card company that holds your balance before it transfers to your new card.
Use Tricks to Paying Off Your Credit Cards to Keep Your Debt Manageable
Debt is something you’ll likely deal with at some point. While you can’t always control getting into debt, you can control its amount and impact on your future. By using these tricks to pay off credit cards, you can manage your debt wisely to have a positive effect on your bank account.
At Greater Texas Credit Union, we’re dedicated to helping you ensure your finances remain healthy. Our credit cards offer you multiple choices and benefits to keep you on track. By knowing what each credit card can offer, you can be on your way to getting out of debt and having one less worry this year!