Caramelle
Active member
Many credit cardholders are unable to pay off their credit card balance in full each billing cycle. This translates to higher interest charges which further prolongs the payment period. If you cannot pay the total amount due, you should at least try to reduce the interest and use the extra money to pay down your debt faster.
Here are simple strategies to minimize your interest charges and accelerate your debt payment:
1. List down your credit card debts, arranging them based on the interest rate. Schedule a minimum payment for all other credit cards while paying off the excess money above the minimum amount due for the credit card with the highest interest rate. This is also known as the debt avalanche approach. It requires discipline. This approach is mathematically sound and will help you save considerably on interest. If that doesn’t motivate you enough, you can try the snowball method which focuses on accelerating payment for the lowest amount of debt.Here are simple strategies to minimize your interest charges and accelerate your debt payment:
2. Apply bonuses, cash gifts, or extra money to your debt payment. Any extra payment will help reduce the interest charges which you can use to pay off the principal debt.
3. Pay above the minimum amount due. Paying only the minimum amount will prolong the payment period. Save on interest in the long run by paying extra.
4. Consolidate higher-interest credit card debt into one, low-interest principal debt. You can do this through a balance transfer scheme or by applying your home equity. Avoid the pitfalls of being tempted to use the available balance after consolidation.
5. Split your monthly payment and pay twice. Take note that interest is computed based on the daily average balance. Thus, if there is no penalty involved, divide the amount due and pay the first half earlier. That can save you some interest.
6. Take stock of your spending, eliminate extra expenses, check your grocery spending, and take advantage of reward points and freebies.
7. Stop the bleeding and discipline yourself to pay in cash for all your purchases. Keep the card in a place out of your easy reach.
8. Increase your income. Take on a second job or some side gigs and use the extra money to reduce your debt.
9. Negotiate with your credit card company for a lower rate. Some banks offer balance conversion for a much lower rate. Decide if this is acceptable and compare this with other banks’ balance transfer rates.
10. When you have exhausted all means to crush your debt on your own, consider debt counseling.