Credit cards can be used as great financial tools; some of them even have rewards such as travel points, cashback, and more. Building a line of credit in your name can help build leverage Credit cards can be used as great financial tools; some of them even have rewards such as travel points, cash-back, and more. Building a line of credit in your name can help build leverage for long-term borrowing and large financial investments, but using a credit card is not something to be taken lightly. Put simply, every time you are using a credit card, you’re borrowing money from a financial institution. Your ability to pay that money back in a timely manner, among other factors, will contribute to your credit score and ability to borrow more money in the future.
“The average credit card debt in Canada is around $2000.”
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The implications of poor credit card management can be detrimental, which is why many people think credit cards are inherently bad. However, credit cards are only “bad” if you’re not paying off credit card debt properly. Here are 6 tips for successfully paying off your credit cards:
1. Learn How to Pay Your Credit Card Bill on time Online
You will receive a credit card statement with the amount you owe at the end of each monthly billing cycle. This statement will show your minimum payment amount and the payment due date. Credit card providers are legally required to send your credit card statement at least 21 days before your payment due date. Setting up auto-pay or paying your credit card bill online are two of the easiest ways to manage your debt. If your monthly credit card payment is late, it will negatively impact your credit score, so always be sure to pay early or on time. Auto pay and online payment options make paying off credit card bills a breeze!
2. Pay More Than the Minimum Balance
With With every statement, your credit card company will send you a minimum payment amount that varies depending on how much of your line of credit on your card is used. That amount is the minimum you have to pay to satisfy your monthly payment agreement with your credit card, but paying only the minimum can be harmful. If your financial means allow, paying more than the minimum will save you money in the long run and help you pay off credit cards.
3. Don’t Shut Down Older Credit Cards
Sometimes, once paying off credit card debt is complete, people get the urge to shut those
Sometimes, once paying off credit card debt is complete, people get the urge to shut those cards down and get a new one, but that might not be the best long-term decision. Your “credit age” factors into your credit score, so you’ll want to keep your old credit cards operational to maintain an older “credit age.” When you close down a credit card you will also be reducing the amount of open credit available to you. This can increase your credit utilization rate and could have a negative impact on your credit score.
What is my credit utilisation rate?
The percentage of the borrower’s total credit currently being used. In general the lower your utilization the better, keeping your CUR below 30% to maintain a good credit score. This means if you have $10,000 in available credit, your outstanding balances should not exceed $3,000.
You can improve your credit utiliaztion score by doing these 6 things:
- Pay Off Your Purchases the Same Day or Make Multiple Payments in the Same Month Or Always Make Your Monthly Payments On Time
- Ask for Higher Credit Limits
- Use More Than One Credit Card
- Keep Credit Accounts Open
- Check Your Credit Score For Inaccuracies
- Deal With Collection Accounts
4. Know the Fine Print
Paying off credit card debt is something most adults will be challenged with in their lifetime. Be sure to do proper research before opening any credit card and understand exactly what you’re getting into. Some credit card companies offer what seem to be great perks or rewards, then have stunningly high interest rates that will make it difficult to pay off. Credit card debt can easily tumble out of control if you’re not aware of the financial contract you’re signing, so it’s worth taking the time to understand.
5. Remember, Interest Adds Up
This goes hand-in-hand with paying as much of the statement amount as you can, but interest will just compound over time. If you have an APR (Annual Percentage Rate) of 20%, keep in mind that you will be charged that 20% on the amount you don’t pay off after each cycle. If you have $1,000 left on the statement after you make a payment, you’ll see that the $200 interest charge gets overwhelming fast! If you have multiple credit cards, be sure to pay down the ones with the highest interest rates the fastest, that way you’ll save yourself money on those interest fees in the next billing cycle!
6. Consolidate Credit Card Debt with a Personal Loan
Many credit card owners don’t know this hack, but you can actually take out a personal loan to pay back your credit card debt in full, then pay down the balance on the loan over time. Personal loans can offer much lower interest rates than credit cards. Some lenders, such as Symple Loans, offer rates as low as 6.99%*, which will be a major decrease in the amount paid over time in comparison to credit card rates of 19.99% or higher! Consolidating multiple outstanding debts into a single payment reduces the number of payments you have to worry about. This reduces your chances of missing a payment or making a late payment.
Credit Cards are a Tool
Once you learn the tricks of navigating the world of credit cards, such as how to pay a credit card bill online and knowing the fine print you’ll be able to see them as tools. while still understanding the ramifications of using them recklessly. Paying off credit card debt not only rewards your pockets, but it’ll also improve your relationship with your finances. If you find your credit card debt getting unmanageable look into consolidating your debt with a loan to save money with a lower interest rate. Use the Symple Loans Quick Quote to determine your loan rate, Apply Quickly and Easily Online, and Get Approved. You can learn more about credit card debt consolidation refinancing here.
With Symple Loans, you can borrow up to $50,000, choose loan terms up to 7 years, and have the flexibility to pay off the balance at any time without fees or penalties.
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