1. Target only one card – Carrying balances on
multiple credit cards is a long slog to eliminate those debts. So from
the start, give yourself a boost of instant gratification. Ask yourself
of what type of short-term financial goal will make me feel like I’m
making meaningful progress on debt reduction?
If your answer is “Having one credit card is totally paid off,” then,
pay as much money as you can toward the card with the lowest balance
first. You should do this even if you need to pay only the minimum
amount on your other cards in the meantime.) If you are looking
forward to “Boosting your credit score,” then, tackle the credit card
with the highest utilization rate – that’s your balance divided by the
card limit on your card. Since your card’s score takes a hit if you use
more than 20 percent of your available credit balance, your score will
significantly increase if you bring the utilization rate down by just 20
percent. And if you want to pay less in interest, then the
tried-and-true method is to pay off the card that has the highest
interest rate first.
2. Ask your credit card provider for lower interest rates –
Often a simple phone call to the card issuer is all it takes to get a
slightly reduced interest rate – provided that you have good credit
score history and you are a long-term customer who spend and makes
payments on time. You could get a couple of percentage points waived
off, which can ultimately add up to hundreds of dollars saved annually.
3. Transfer your balance to other card (cautiously)-
It’s move a credit balance from a card with a high interest rate is
transferred to a card with a substantially lower one. And it’s one of
the smart moves; you can save thousands of dollars a year. But be
careful before opting this option because you should transfer a balance
to other card only if you think you are committed to paying off the
transferred debt within an introductory low-interest-rate time (which
typically lasts from 3 to 12 months depending upon the card issuer. If
you fail to pay the transferred amount in the time offered, your
interest rate could skyrocket, possibly ending up higher than the one
you just tried to got rid of.
4. If you’re really trapped, make minimum payments each month –
Credit card issuers typically charge their interest on a daily basis,
that means the sooner you make the payment, the faster your average
daily credit balance is reduced, which converts into fewer amount in
interest that you ultimately pay. If you’re on a tight situation, move
on and pay the minimum due each month at least, then try to make the
same again after couple of weeks later.
Credit: Jinnie Mathurin
No comments:
Post a Comment