Paying pay off debts, especially credit cards debts can be a struggle for anyone. Sometimes it is confusing and overwhelming to understand how the credit card charges work and what options you have in order to organise your finances when things get out of control.
So today, I will cover a few options that could help you pay your credit card debt faster:
Balance Transfer
Most of banks offer a “0 interest period” for clients wanting to bring their credit card debt over from another bank. These balance transfer offers vary, some banks offer 0 interest for 5,6 and even 12 months. This means less monthly charges and the chance of making extra repayments which will hep you reduce your credit card debt.
Switching Your Credit Card to Low Rate Type
Normally banks offer a variety of credit cards. Some have lots of benefits such as awards points and travel insurance. These types of cards are known to have high interest rates. So, if you have one of these cards and are not planning on paying your credit card in full every month, you could be paying quite a bit in interest charges which will make it harder for you to pay your debt off.
Having a low rate credit card will decrease your monthly charges, therefore less debt to pay, giving you the chance of paying a little more every month.
Stop your credit card
This sounds a bit extreme, however sometimes this is the easiest thing to do, especially if your finances are out of control. Some people even cut their credit card into pieces so they can stop spending money that they don’t have. Remember you still have to pay the debt!
Make extra payments
Some credit card bills displays only a minimum repayment required which means interest only. If you are paying the minimum repayment only, chances are you are not actually paying your debt off. You are just maintaining it by paying only the interest accrued for that month. To pay the debt, you need to pay more than the minimum repayment. Determine how much more you can afford to pay on monthly basis in addition to the minimum repayment.
Set up auto payments
If you have online banking you should be able to set up auto credit card payments. This means the credit card bill will be paid automatically every month provided that you have a nominated account with available funds to be debited from. You should be able to choose one of the credit card online payment options bellow:
- Minimum Repayment: Interest Only
- Full outstanding balance: Everything owing on your credit card leaving you with $0 debt every month (People who use their credit card a lot do that, to ensure they have all the credit available again next month. This is also a good option if you want to ensure you never accumulate debt again)
- Set amount: You can choose any amount, provided it is more than the minimum repayment.
Options 2 and 3 will help you pay your credit card debt faster.
Debt Consolidation
If you a few credit cards, it can be financially stressful to meet monthly repayments and keep track of them. An option is to consolidate your debt into one facility. You will need to speak to your bank about this. Some banks offer personal loans, and its benefits may be:
- Lower interest rates than credit cards; therefore less fees and charges
- Unsecured: meaning you don’t need to have an asset to offer as security to be eliable
- A set time frame to pay it off: it can vary from 1 to 5-7 years
- The repayments are interest and principal: meaning you are actually paying the debt off
- Flexible rates: meaning you can make extra repayments if you wish to pay your debt sooner
Be in control of finances: To avoid financial stress it’s recommended to pay the credit card outstanding balance in full on monthly basis.
Please note every bank/financial institution has different products and procedures. It is important to do your research and speak to someone from your preferred financial institution about their best product and solutions to suit your needs.
