4 WAYS TO PAY OFF YOUR CREDIT CARD
Before we show you 5 tips to pay off your credit card faster, we wanted to look at the perils of only ever making the minimum payment (normally 2.5%). Credit card companies thrive on ignorance and when you take into consideration that only 20% of people know how long it will take to pay off a credit card with a balance of £1,000 at an APR of 18.9% you start to understand why so many lenders love this market.
DID YOU KNOW THE ANSWER?
If you are like the majority of people you either had no idea or you just got the answer wrong. Don’t worry though as you’re about to become one of the elite. Paying a minimum monthly payment of £25 will take you five long years to shift this debt at a massive cost of £509. This means almost everything you purchased actually cost twice what you paid for it, which is ironic if you waited until the sales to buy it. Now you know just how much you are paying lets show you how you can clear your credit card faster and slash the cost of it in the process.
Tip No. 1-Start by Setting a Goal
Setting this goal may not seem like the key to paying off your credit card at first, but once you set this goal it’s the actions that follow that will make the impact. Step two will involve looking at your debts, this in itself can be a revelation as most people unconsciously drift into high balances and don’t even realise how much they owe. Once you know where you are you can come up with a plan to get you to where you want to be. Not used to goal setting? Check out this web site for some great tips.
Tip No. 2-Every Little Helps
Like all good advice is as obvious as the nose on the end of your face and this little gem is no different. Get into the habit of paying a little more, for example paying just £5 per month more will save you a whopping £292 and shave more than a year off the time it takes to clear your credit card.
Tip No. 3-Switch to a 0% card
Switching to a 0% card and paying £30 per month will shave three years and two months off your payment time and even with the nominal transfer fee most of these cards carry you could save £475, now that’s what I call a tip. These cards are easy to find, just type 0% into Google and choose a company that best suits your credit status. Do not worry if your credit score is low, there are companies out there who are still willing to give you a 0% balance transfer.
Tip No. 4- Put Your Cards on Ice
Some times what we all need is some tough love, I’m sorry to say but getting out of debt will mean prizing those income suckers out of your wallet so you can’t be tempted to use them when you see that must have bargain (that will end up costing you twice what you pay). One neat little trick is to put your credit card into a block of ice and keep it there until the balance is cleared. This will get you into the habit of paying as you go which at first will seem restrictive but as the saying goes “this method will set you free” well the saying was really “The truth will set you free” but you get my point.
For more information please do not hesiate to contact us at Hoskin Home Loans.
Hoskin Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority number 613005. The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
