Do you make only the minimum payments on your credit cards? If so, you could be sentencing yourself to a lifetime of debt. A good tip is to pay a fixed amount each month, rather than the minimum - this will dramatically shorten the repayment period. I didn't realise just what an impact making the minimum payment could have until I came across thisLog In on the Money Saving Expert website. I won't go into all the details, but just a small overpayment each month can make a big difference. Okay, the ideal situation is to pay off the bill in full when it comes in, so you don't pay any interest charges, but not everyone can manage that. The good news is, even an extra £10 or £20 each month can help to pay off your balances that much quicker. Check out the article and the calculator and save yourself some cash.
Interest and overall expense of credit cards is honestly why I do not have credit cards anymore. If I can't pay cash for an item then I wait until I can afford to. I am not even in favor of car loans either. I have had 2 in the past and the amount of extra money you pay on a car loan can be crazy. In some cases you can pay over $10,000 more, quite often it is more then this. To me this is not worth it. I would rather drive an older car then pay that kind of extra money on a car. Only thing I would get a loan for would be a house. It is amazing how much money you will spend anytime you use a credit card or get a loan. To me, only a house is worth paying that kind of extra money for.
I am not a user of credit cards any longer. Once I retired and my income was significantly reduced I cut up my cards. At first it took time to think about if I really wanted to buy something but since I no longer had the cards available it did not take me long to figure out that the majority of my past purchases were frivolous and not really worth it. Now it has been over four years since I have had a credit card and I do not miss them at all. If I really want something that I do not have enough money for I can save and eventually buy it...but in reality, most of the items I have saved for I don't buy...HAPPY HAPPY HAPPY!
We always pay more on our minimim payment. However, we learned from our mistakes since we filed bankruptcy last year.
I have two credit cards. One is from my local credit union and has quite a small limit ($500). I make purchases on this card and pay it off each month. My other card is for emergencies/booking vacations only. The card currently has no balance, but a credit limit of $3500. I will not use this card unless I truly need to. I prefer to have a substantial balance in my savings account that I use for emergencies first. Should this account deplete, I may use the card, but only if truly necessary.
This is a very valuable tip, thank you. My mom, who has a very high credit rating...told me to have at least one credit card so that I can work up a good rating. She also told me to not use it for frivolous items and to always pay more on the outstanding balance...if not all. It really works, otherwise, you are a hamster on a wheel...just horrible. All other cards sent to me go straight in the trash, where it belongs.
The ideal, of course, is to only spend on the credit card what you know you can pay off in a month, so that you never have a balance at all. Unfortunately, some people (like myself, recently) get into a situation where paying the minimum balance is all we can do. At those times, paying a minimum is certainly better than not paying it at all, which not only compounds your debt, but also ruins your credit rating. I'm now beginning to climb out of a hole in which I was not able to pay my credit for about a year... and I can only afford to pay slightly more than the minimum now... but at least now I know better.
For the most part we pay off our credit cards at the end of each month. One good tip I heard if you can't pay off the full amount each month. Find out what your APR is, and then double it. Pay that much more than your minimum payment. For instance, if the interest rate is 6%, then pay 12% (at least) mor ethan the minimum. This gets you paying down the balance and not just pyaing hte interest each month.
I would always pay the minimum balance, atleast, if I had a credit card. However, we live a cash lifestyle, and I prefer it that way.
Only using your credit cards if you can pay them off within a month worked really well for me for a few years - I built a good credit that way. Then my circumstances changed suddenly and I ended up having to charge my bills to the card for a couple months. Now I am finally in the process of paying off my debt. Once I'm done, I'm going to do exactly what some of you mentioned you're doing right now - I'm going to keep only one of my cards and get rid of the rest of them. I'm also going to start an emergency savings account, so I don't have to use my credit cards again. I've learned my lesson really well and I'm looking forward to being debt-free again!
It sounds nice, but then you have to wonder where that extra 10 or 20 is coming from. If you're strapped or you've recently lost a job or worse of all you're working poor then the minimum might be all you have. Thats why you have to wait until income tax maybe or hope for a windfall. At the very least make the minimum and work from there.
I have some cards that have actually lowered the minimum payment by a lot. My QVC card minimum payment used to be about $75 for a balance of about $1,000. Now they only want $27 for a balance of about $850. This is their strategy to make more money out of you, and lure you into thinking that you have more money than you really have.
This is really true. I learned this the hard way. I kept on paying just the minimum amount due and after a few months, my debts just got bigger and bigger. I don't even use them anymore.
It can definitely make a huge difference to paying off a card by simply doing a little more than the minimum payment. I just looked up mine as an example. I don't intend to do it either way actually....seeing as how I plan to pay off the emergency costs in much larger portions. If I were to only do the minimum payment, though, it says it would take 7 years to pay off...but if I were to pay $85 a month, it would only take 3 years to pay off. That's less than half the time!
I agree. If you do not have the money to make a payment that is more than your minimum payment, then do not worry about it. What you truly need to do is get your finances in order. If you find that you can only afford the minimum, then pay that! There is NO reason to not pay that - you risk making your credit score worse by missing payments, paying them late, or not paying the minimum. Once you get things organized, you will be able to sit down and figure out a stricter, better budget or find ways to get a higher income. Whatever you do, listen to Esperahol: "At the very least make the minimum and work from there." You've always got to start somewhere.
In my own experience, I never got out of debt by just paying minimum. It was never ending that way. And nowadays I just try to avoid using my card as much as possible, one thing I do is I always leave it at home.
It took me a long time to pay off my credit card debt. So, I only use it for emergencies. I do keep my accounts active by buying small purchases and paying in full. If I can't pay in full when the bill comes due then I don't buy it.
When I was younger I would just pay the minimum amounts. That is until one day I started doing the math and saw how much more I was just giving away in interest to the credit companies. From that point on, it was "pay it off as soon as possible" as my mindset when it came to cards. And I'm still like that now.
I will go to my line of credit to clear the credit card off. The interest rate is simply always lower than the card. Yeah I know some may not have a line of credit. I am not rich but I I guess a good enough risk that I have a credit line. If I can I will pay off the card without going to credit line, but if I have to, I will, just to walk away from those interest rates. Ryder13
I'm learning this late in life. I have long standing accounts and most times pay the minimum. I see why my credit card companies love me so much...they are making money. Now whenever I have a few extra dollars I put it towards my credit card payment. I 've been paying extra on my car note and already see a drastic reduction of the principle by paying more than the minimum. See results like that keeps me motivated.
