Pay Attention to These Credit Card Repayment Myths if you Want to Get Out of Debt
Credit Card Repayment Myths
The problem with credit cards is that it is only ever a simple tap or swipe that stands between you and whatever you choose to buy.
That impulsiveness will soon be met with despair when you see your debt climbing, and when you realise that your repayments increase.
If you want to make the most out of your credit card, then it helps to understand some of the myths that are often associated with using credit cards, so that you can keep your payments low and manageable.
Take a look below to find out more.
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The Credit Card Company Set the Minimum Payment
One myth that a lot of people believe is that the credit card companies are the ones who set the minimum payment.
This is not true at all, in fact, you determine how much you can afford and you set the amount that you need to pay in order to meet the financial goals you have.
The one stipulation here is that the credit card company will determine the lowest amount you need to pay in order to meet your contractual agreement.
If you want to get out of debt really quickly then it would be in your best interest to try and make sure that you pay as much as you can every month.
If You Pay the Minimum – Then You’ll get out of Debt
If you make the smallest payment on your credit card every month then you may think that this is enough to get you out of debt.
This is not the case at all.
If you pay the minimum, then you will be meeting your contractual obligation, but you won’t be getting out of debt any time soon.
If you check your credit card statement, then this will tell you how long it is going to take you to get out of debt if you make the payments you are right now.
When you look into this, you will soon find that it is actually going to be a very long time before you even make a dent in your debt.
As if that wasn’t enough, most of the time, your minimum payment will be mainly interest, so you won’t be chipping away at your debt as much as you think you are.
If you check your statement, then you will see that your payments are usually 2% of what you owe.
Your minimum payments will normally be based on this 2%.
If you make minimum payments, then you will be accumulating a lot of interest and this will really work against you if you are trying to get out of debt.
You have to Make your Payment Once a Month
When you look at the credit card statement you have, you will soon find that this shows your monthly payment.
That payment doesn’t need to be made all at once though.
As long as you pay this much before your next due date, you will have met your obligation.
This means that if your minimum payment is around $100, you can pay $25 a week, or you can even make a daily payment if you want.
When you do this, you will soon find that you are able to clear your debt without having to put too much pressure on that single monthly payment.
If you have ever heard of accelerated mortgage payments or even loan payments, then you should know that the same applies to credit cards.
You can make several payments based on when you happen to receive your monthly income, or you can make one payment in a month.
If you do this then with each payment you make, you will be paying less interest.
You might not see the benefit of this right away, but over time, you certainly will.
If you know that you need to get out of debt, and soon, then you need to figure out what your total household income is.
You then need to determine how much more you can devote to your credit card.
This might not be a lot, but if you can set a higher payment to go out every month then you will soon see your debt coming down.
Payments are Applied to your Card in Order
If you want to know if this myth could concern you then you need to check with the credit card company you are with.
In Canada, you will usually find this in the agreement.
Regular, or extra payments make it much easier for you to clear your debt.
That being said, they are not always applied to the oldest item first.
Interest rates will also vary depending on how you choose to use your card.
If you need any kind of clarification on this then make sure that you contact your credit card company to see if they can give you some help with that.
At the end of the day, there are so many things that you can do to try and help yourself to pay down your credit card, and if you follow these top tips then you will soon find that it is easier than ever for you to get out of debt.
If you need some help with the credit card debt you have, or if you are debating seeking out options such as debt consolidation then it helps to seek professional advice first.
When you do, you can then feel confident knowing that you are getting the help and support you need at every stage of the process.
Your advice service can also help you by providing you with guidance regarding the cards you have, and the interest rates you are paying as well.
If you want to find out more, then contact Bankruptcy Canada.
When you do, you can then get all of the help you need without any problems at all.
You can contact us by phone or by email at any time, and when you do, we will then give you all of the help you need.