If you aren’t careful, racking up a substantial debt with your credit card is quite easy. Once you’re in debt, your recurring credit card payments can eat into your disposable income and cause you much distress. Here are 10 smart steps to shrink your monthly credit card bill:
1. Pay off your balance every month: The best way to avoid accruing debt is to pay off your credit card balance every month. Regardless of what other financial commitments you have, ensure that you make this your goal.
2. Prioritize repaying debts with high-interest rates: If you have multiple credit cards on which you are charged varied interest rates, ensure that you put away money to repay the balance or debt on with the highest rate of interest.
3. Repay as much as you can now: If you have some savings, consider making a slightly larger payment towards your credit card balance right away. Doing this can help reduce the debt burden.
4. Cut your expenses: If your balance seems to be carrying forward each month, consider taking a look at your credit card statement and cutting down on expenses you can do without.
5. Stop swiping your credit card: If your credit card debt is out of control, and you aren’t able to clear your debt despite the best of your efforts, consider not using your credit card for a period of time. Leave your card behind and stick to using actual money when you need to.
6. Consider balance transfer: Several lenders today offer a balance transfer facility, which will allow you to transfer your balance to a different lender and enjoy a certain interest-free period. Keep in mind that this facility is offered at a nominal charge.
7. Ask for a lower rate: You can directly reach out to the lender to negotiate a lower interest rate. If you’ve been a long-time customer who has not caused the lender trouble in the past, they might just oblige.
8. Improve your credit score: One way to secure a lower interest rate is to improve your credit score. Make sure to check your credit score and take the required steps to improve it.
9. Consolidate your debt: If nothing works, consolidating multiple debts can help you get a handle on your monthly repayments. Taking out a loan to repay your various credit card balances is one way of doing this.
10. Ask for a long-term repayment plan: If you are unable to clear your credit card payments and are racking up more debt, you can ask your lender if they offer long-term repayment plans to customers. This may, however, require you to surrender your card and close your account with the lender.
Your credit card, when used rightly, can help you make large purchases that you may otherwise not be able to afford and maximize on the lender’s rewards programs. Once you have your credit card payments under control, ensure that you use your card wisely to make the most of it.