|ELIMINATE DEBT FOR BETTER CREDIT|
|Posted on: Dec. 14, 2017 in Debt|
Credit card debt does nothing but sink your credit score, cause stress, and cost you money. You have everything to gain from eliminating it and getting to a point where when you do use a credit card, you’re able to pay it off in full each month. But as balances mount, it can become increasingly difficult to stay on top of the debt, let alone pay it off. If you are carrying balances on your cards, taking steps to reduce them can be highly beneficial.
The Dangers of Interest
Interest is the price you pay to borrow money. It’s usually calculated as a percentage of the amount you owe and is often expressed as an Annual Percentage Rate. However, that annual amount can be divided into smaller increments such as monthly or even weekly, allowing the interest charges to grow more quickly. Once the interest is calculated, it will be added on to whatever principal (the amount originally borrowed less payments made) remains on the debt.
The problem with interest is that it can grow faster than you think, especially when the rate itself is high. Borrowers with bad credit or those who’ve made late payments in the past can sometimes have interest rates over 20%.
Avoid Making Only Minimum Payments
When you get a credit card statement, the company will let you know the minimum you need to pay that month. But look closer at your statement and you’ll see that the card issuer has provided you with some valuable information. They will show you just how long it will take you to pay off your balance if you make only the minimum payment, and they’ll also tell you how much it will cost you including interest. They’ll also provide you with how long and how much you’ll pay if you pay an amount higher than the minimum. By paying additional amounts each month, you’ll incur less interest charges and pay off the balance significantly faster.
Make Wise Credit Choices
If you’re carrying a balance each month, spending more on your credit cards will only deepen your debt. Cutting your spending may be difficult, but it’s worth the effort to enable you to pay off what you owe. If you’re not in debt, a credit card is an excellent tool to make large purchase or buy things online. However, accumulating debt can happen quickly if you’re not careful. As much as possible, use your card carefully and pay off as much as you can each month,
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