Repaying Credit Card Debt

While earning a credit card debt can be a fun and rewarding experience, most find that the struggle to repay it isn’t. So even though the basic rules of credit card management are all too easy to understand, the fact of the matter is that they’re not easy to follow.

That’s why the most popular (and unpopular!) tip available to help you find the way to repaying your debt is to remove temptation. In other words, cut up your credit cards.

Tip # 1: Cup Up Your Credit Cards

Temptation is strong, and willpower is weak. That’s how you ended up in this mess in the first place. It’s plain to see that the most important step to managing your debt is managing your spending. Once you’ve cut up your card, even if you were to only make the minimum monthly repayments, your already moving in the right direction.

Tip # 2: Get A Low Interest Credit Card

The interest on your credit card is killing you. Each month the interest bill makes it harder and harder to bring your balance closer to zero. Thankfully, most banks these days offer low interest credit cards, or cards that include a low or no interest balance transfer rate.

If you’re likely to be able to pay off your credit card within the space of a few months then it’s definitely worthwhile looking into one of the low interest or no interest balance transfer cards. These cards offer an extremely low interest rate for the first three to six months of the account on balances that have been transferred from other credit cards. But if your instincts told you there must be a catch, you were right. If you start using these cards for general spending, you’ll quickly find yourself with an even bigger debt, and probably an even bigger interest bill.

If you think it will take longer than a few months to repay your debt, then you should be looking into a low-interest credit card. These cards offer lower interest rates for the long term and are generally of the no frills variety of card. You’ll find fewer rewards programs, insurance extras and other bells and whistles on these cards but the payoff is a lower interest rate.

Tip #3: Consolidate Your Debt

If you’re a home owner you can investigate options like using your mortgage to repay your credit card debt. Most credit cards have high interest rates while most mortgages have low interest rates. If you reduce the interest rate on your credit card debt by half, but continue to make the same repayments you’ll significantly reduce the amount of time it takes to get your account back in the black. There are other ways to consolidate your debt, like personal loans, and all these should be investigated as part of your overall debt reduction strategy.

Tip #4: Reconsider Your Rewards Program

Many people are lured into credit card rewards programs with the promise of cheaper holidays, gift cards or cash back offers. Research on these programs has shown time and time again that the increased cost of maintaining these accounts, the application fees, annual fees and higher interest rates, outweigh the perceived benefits of having them. Unless of course you habitually spend high, and repay monthly (and if you’ve made it to this point in the article, it’s safe to assume you don’t).

Getting on top of your debt is a lot like dieting for weight-loss. It’s difficult. It requires discipline and planning. And once your goal is achieved, it requires constant work to maintain it. But of course the rewards are well worth it.