Credit card companies make money because a large majority of people who use credit cards do not pay the amount in full. They choose to pay only the minimum every month because either they are reluctant to pay more or think they cannot afford it. This leads them to a debt trap, which they find hard to break. It can be years before they can clear off the debt. You can repay the credit card debt quicker by following some simple tips.
Pay more than minimum: Credit card companies love people who pay the minimum amount of the total outstanding each month. If you tend to pay off just the minimum outstanding amount, you will never be debt-free quickly. You also end up paying lot of money toward interest. But if you pay just $5 or $10 dollars more each month, you can reduce the payment duration drastically.
If you are wondering how much extra amount to pay, remember that paying $10 more will reduce the payment period drastically. Card companies ask you to pay 2% of the outstanding amount. E.g. if the amount outstanding is $2000 and you pay only the minimum amount, you will clear off the dues in nearly 32 years, provided you don’t use the card for any more purchases. But increasing the amount by $10, will shave 8 years off the repayment period. Besides it will save you a lot of money.
If you think that paying $10 more towards the amount due is lot, it is not so. Rework your budget to provide for that extra money. Cut out unnecessary expenses like eating out, smoking and going to the movies. The money saved can then be utilized toward making your card payment. This makes you debt free very quickly and can save your money