How To Pay Off Credit Card Debt Faster
Credit cards, unlike other loans, give you the power to choose your repayments. You can pay as much as you like, to get rid of the debt faster, or you can choose to pay as little as you can, which is the minimum repayment set by the lender, usually a very small percentage of the balance you owe + interest.
This minimum amount will change as you pay more off your card, as your debt gets lower, so too will the minimum amount you have to repay. This also means the time untill you pay off the debt will keep stretching and stretching. The longer you have this debt, the more interest you'll be paying aswell.
The more interest you pay, the better off the banks are, so the quicker you repay, the better off you are.
How to avoid the credit trap?
Don't Follow The Lower Repayments
If you follow what the bank sets as your minimum repayments, you'll be forever paying interest, the bank will make the amount keep getting lower and lower, just so you can be stuck with the debt for as long as possible.
Set your repayments to a fixed amount, and when the minimum repayment amount is lowered, stick with the amount you set. Try and make this fixed amount as high as you can afford. The quicker you repay the debt, the more money you save.
Larry has a credit card with $4,000, in his first month he makes the minimum repayment which are about $70 a month, the next month the bank reduces the amount he has to pay, but Larry keeps paying the $70 instead of this new lower amount.
He kept paying this same amount of $70 every month from then on. Larry had his debt paid off in 5 years! If he'd stuck to just paying the minimum repayment everytime it lowered, it would have taken him over 25 years to get rid of his debt!
Use A Balance Transfer Credit Card
If you have a high interest rate on your card, chances are you have a high amount of interest built up in your debt. That means more of your repayment is being taken to pay off just this interest, your balance will never shrink! If you reduce this interest, then you'd have more money left to pay off the balance and get rid of the debt quicker.
Do this by getting a new card with a good balance transfer rate, there are alot that offer O% interest on any debt that you transfer over from your old card. You can find them on our Balance Transfer Credit Card Page.
Combine these two tips to pay off your credit card debt faster, by switching to a 0% balanca transfer card, and paying off as much as you can before that 0% period runs out.
Using these strategies should help you break the cycle of credit card debt, and help you pay off your debt ASAP!