Having the normal expenses such as a mortgage, utilities, car lease, insurance, not to mention food, gas, and spending, the last thing you want to worry about is a credit card payment if you are already struggling to get by just by meeting your normal monthly financial responsibilities. As you continue to use you card you will see not only the balance rise, but the minimum payment that goes along with it. If you want to avoid putting a huge chunk of your income towards your credit card, you will need to start to make some changes.
Start Increasing Payment Size
Depending on the size of your credit card balance, you could start to see a minimum payment due of a few hundred dollars by the statement due date. Granted, most of this will go towards interest, but if you’re lucky you and pay a little of principal balance, but I wouldn’t base my scheduled minimum payments on chipping away at any balance. Until you start actually making larger payments you will start to see the minimum payment go down, but while you’re driving that payment down, try continuing to make those larger payments until the balance is cleared out and you no longer have to worry about it.
Give the Card a Rest
If you find that your monthly credit card payment is starting to rise, it could be a sign that you should put your plastic away and start paying with cash that you can afford. If you can keep the card put away until you really start paying down the balance, it would really help your financial situation by not continuing to dig yourself into debt. It may be an adjustment to turn off the shopping spree, but it will be worth it in the end when you adapt to your new frugal lifestyle if you can finally pay off that credit card balance, giving you motivation to never carry a balance ever again.
Try and Negotiate a lower APR
If you are in the unfortunate position to carry a balance over each month, then unless short of having an employee discount or a promo interest rate, you are most likely paying towards a high interest rate, some, depending on your credit score, could be upwards of 16% APR. Certainly, at that APR if will take more than just the minimum payment to get the balance down, so you might want to try calling your card’s customer service number and try and negotiate a lower APR. Use your perfect payment history as leverage, even opting to close the card and transfer the balance and see if they will take the bait. If you don’t get anywhere with the first agent, escalate up the chain until someone will help.
Transfer to Another Card
If you were actually unable to get a lower interest rate, if you have other cards open or credit card offers in the mail with greater promotion APR rates, it may be beneficial to transfer to another card. Sometimes you can get 0% APR on balance transfers for a year, you will just have to watch out for, say, a 3% transaction fee, but depending on the size of your balance, that initial payment hit could be far less than finally paying off your card’s balance with the help of 0% APR.
Work on Boosting Your Credit Score
When it all comes down to your impression on a lender it is really only one thing that stands out: your credit score. Sure, payment history and income are definitely important, but you will not secure any of the best rates on the market with having a poor credit score. If you find yourself stuck and unable to get a more favorable rate, you will need to strive to improve your credit score so you can then move onto a lender that fully appreciates you. It will take time, but the hard work and patience will pay off with less money coming out of your pocket.
Payoff the Statement Balance Each Month
When you are finally in a place where the debt has come off, the only way to avoid paying interest and having a credit card payment to make each month it comes down to two things; either don’t use the card any longer to build up a balance, or pay the full balance by the statement due date so that you do not carry over a balance and pay interest going forward. Having a credit card is a big responsibly for your personal finance and future depending on your use, so use it wisely.