Having a credit card or two, along with fixed loans, can be good for your credit score – as long as you control your balances and make your payments on time. When it comes to credit cards, we know how easy it can be for your debt to spiral out of control, but smart strategies for paying down credit card balances can help you prevent this from happening.
Tips for Paying Down Credit Card Balances
Whether you’ve already found yourself in debt or want to prevent future debt, knowing the best methods of paying down credit card balances can help. Here are a few tips we believe can be very effective in helping you control your finances.
Pay off the credit card with the smallest amount owed.
Some people would argue that the first step is paying down the credit card with the highest interest rate, and that could be a great way to knock down your overall debt. However, the card with the highest interest rate might also be the one with the highest debt, which means you might work on paying it off for years while the debt on other credit cards is just getting higher and higher.
Instead, do continue to make minimum monthly payments on the credit card with the highest interest, but really focus on completely paying off the credit card with the smallest debt.
Small wins will increase your confidence and take some of the stress off your mind. When you can forget about that small credit card debt, you can go on and try to tackle the bigger debts with a more positive mindset.
Focus on paying off the credit card with the highest interest rate.
When you have a high-interest credit card, you can spend years paying off only the fees and interest that is tacked on. Instead, try to pay significantly more than the minimum balance on this credit card every month. Eventually, you’ll see that balance come down, and your monthly payments will become more manageable.
Obtain a personal loan.
With a personal loan, you can consolidate your debt and make only one monthly payment for all of them. Doing so can give you some peace of mind, help you see the overall picture about how much you owe, and help you minimize the balance over time. Perhaps the greatest benefit of a personal loan from a credit union is that you only have a limited amount of time to pay it off, so you essentially can’t continue to make purchases like you might with a credit card.
Manually keep track of your expenses.
We say “manually” because when you write them down with your own hand and see them with your own eyes, you’ll really be astonished about how much you are spending. It’s too easy to swipe a credit card frequently every day and not look back, but when you force yourself to write it down, you might think twice before making those unnecessary purchases.
See if you can get lower interest rates.
If you know your credit has improved since you first opened a credit card, call the credit card company to see if you can get your interest rate reduced.
Make your payment twice a month.
An excellent strategy for paying down credit card balances is to make two minimum or more-than-minimum payments every month. Send out a check every two weeks instead of every four weeks. You’ll soon find that your balance will be lower, and less interest will accumulate.
Contact Your Local Credit Union Branch for Additional Tips
Remember that owning a credit card can provide you with the freedom to make needed purchases or to take advantage of the many exciting things that life has to offer. It is important, however, to use your credit cards wisely.
These are only a few of the strategies for paying down credit card balances. For additional tips or to obtain a personal loan to pay off your debt, speak with one of our representatives at any of our credit union branches in Effingham County, Bryan County, or Chatham County.