5 Tips On How To Pay Credit Cards Faster
Learning how to pay credit cards faster delivers a multitude of benefits. In addition to managing credit better, you'll save finance charges, increase credit scores, and develop good habits that will carry over to other areas of your financial life.
These five tips are relatively simple, but very effective. Paying down credit card balances can, at first, seem like a daunting challenge. Follow this strategy and you'll enjoy a much less stressful and more profitable financial existence.
- Always pay more than the required minimum balance. Unless you have a burning desire to turn your credit cards into mortgage-like long-term financing, never pay only the minimum payment desired by the card company. In addition to paying your credit cards faster, you will save many dollars in finance charges.
- Try to borrow no more than 40% of your credit limit. Once again, you will enjoy multiple benefits from this technique. Along with keeping your outstanding balances and monthly payments reasonable, your credit score will strongly increase. The credit scoring formula delivers large points to people who manage credit limits conservatively.
- Make all monthly payments on time and as agreed. Most credit card companies charge high fees (many would say, exorbitant) for late payments. These fees are added to your credit card balance and incur finance charges. If this sounds like "interest on interest," you're correct.
- Use grace periods to your maximum advantage. Many credit cards offer a grace period (often up to 25 days) before which purchases incur finance charges. Try to pay as much as possible during this period as you may enjoy "free" credit, allowing you to pay down credit card balances quicker.
- Pay yourself first. This strategy delivers multiple benefits. Along with paying credit cards faster, it can significantly increase your savings balances. For example, if your monthly required credit card payments are around $100, put "yourself" into your budget, right at the top of the list. Budget a pay yourself first amount of $250. Each month, take $200 and pay your credit cards. These double payments pay your credit cards faster and save you finance charges. Put the remaining $50 into savings. You'll be amazed how quickly your savings account balances increase.
Use these simple techniques to pay credit card balances faster, improve your credit scores, save finance charges, and increase your savings. You'll also always have some available credit to handle those emergencies that tend to happen at the worst times.