Many of us have credit cards and most people actually repay their credit cards in full each month. However, there are some of us that will only repay the minimum amount and therefore have an outstanding balance. It is wise to repay this balance though, because you will otherwise be paying interest on it and interest on credit cards can be pretty high. Luckily, there are easy ways to repay it and there is a simple step by step method that you can use.
- Ensure you repay the minimum – it is wise to start by making sure that you repay the minimum amount each month. This is something that card issuer will require and otherwise you will have higher interest than that already charged. Therefore, it is sensible to set up a direct debit so that this happens automatically. This will ensure that you are always covering that minimum. It will not be that much money either, just the interest and a small repayment, but it is still wise to check carefully to make sure that you have enough money to cover it in your account each time. If necessary, change the payment date so that it is just after you are paid and then you will be sure that you have the money available.
- Stop using the card – if you want to repay the card, then you will need to stop using it as much as possible. If you keep using it then it will get more and more expensive to repay it. Therefore, try to keep it for emergency payments only for a while until you have paid it off and are back in control of the situation again. It can be wise, to repay it in full each month once you have repaid it, to prevent this situation happening again but you will need to monitor your spending carefully to make sure that you can afford it.
- Start paying off chunks when you can– it is worth knowing that you can make repayments on a credit card whenever you want to. This means that you will be able to pay off a chunk of what you owe whenever you wish. This can be well worth doing, because the less you owe, the less interest you will be charged and the more money you will have available to repay it. However, you will need to find the chunks of money to repay it.
- Spend less elsewhere – it can be good to look at your spending and generally try to reduce it and then you will be able to put more towards repaying the credit card. The first thing to look at is whether you are paying too much for things. It can be easy to overpay without even realising it. For example, things such as utilities and insurance are often more expensive than we realise and if we do a quick price comparison, we could end up paying a lot less for them that we do now and we will not notice any difference in the service that we get. The same could be the case for other things that we buy. We may buy an expensive brand thinking it is better quality, but this may not always be the case and it is a good idea to check whether we are actually paying more than necessary. Cutting down on the amount of things we buy can make a big difference as well. Try to prioritise spending on essentials and see if you can cut back on things that are not necessary for a while. Once the card is repaid, you will not have to worry about this so much, but while you are trying to repay, it can help if you reduce spending where you can.