Reducing credit card debt is not simply a case of making regular monthly payments. This article will show the best ways to reduce credit card debt quickly, resulting in lower interest payments.
Always pay more than minimum payments
Credit card minimum monthly payments are designed to keep credit card customers in debt for longer. Customers who only make minimum monthly payments will be paying more in interest fees over the lifetime of the credit card account. One of the quickest ways to reduce credit card debt is to make regular, higher monthly repayments. As the credit card balance reduces, so will the interest payments, meaning more money will go towards reducing the actual balance. If credit companies have increased their interest fees the customer does have the option of cancelling the credit card contract. Credit card customers can then continue to pay installments at the previously reduced interest rate until the account has been cleared.
Pay more expensive credit cards first
Paying off higher interest credit cards first is the wise option. Higher interest credit cards mean more interest fees with less money going towards the actual credit card debt. Smart consumers will be able to reduce debt quickly by paying more to the higher interest credit cards first and less to the lower annual percentage rate cards. It does make financial sense to make minimum repayments on low interest credit cards while focussing larger repayments on the higher interest credit cards. Customers should also ensure that late or missed payments do not occur; this will simply add financial charges including additional interest fees. Customers with multiple credit cards should not miss a payment on any of their accounts as this will simply bring additional fees and increase the balance.
Transfer balances to zero interest credit cards
If possible, credit card customers should consider transferring existing credit card debts to zero interest credit cards. Many lenders do offer zero interest credit cards with very long introductory offers. Some credit card introductory offers will provide zero interest on balances for as long 18 months. This gives customers the chance to move debts from high interest credit cards to zero interest cards, and then make repayments without paying any further interest fees. Customers should ensure that the balance is cleared or significantly reduced before the introductory offer expires. If the balance is not cleared within the introductory period, interest will begin to accumulate. It is also important not to spend on the new credit card but it is a good idea to keep another low interest credit card for spending purposes.