Whether you’ve got a little or lot of outstanding credit on your card, here’s everything you need to know about clearing it.
When used right, credit cards can be an incredibly convenient financial companion. They can improve your credit score, prove your money-management competence, and help finance big and small purchases.
But, if you let your spending get out of control they can soon turn into quite the financial burden and lead to a spiral of debt that’s hard to get out of.
To help keep your credit card spending and payments on the straight and narrow, here’s everything you need to know about paying it off.
How can I pay off my credit cards faster?
First things first, make more than the minimum payment each month as this will contribute to paying off the remaining balance, which also means paying less in interest each month. Win win. If you clear your balance on time and in full each month, this will help to improve your existing credit score and show other potential lenders you are a responsible borrower.
Last but not least, if you have multiple unsecured debts you could consider consolidating your debts with something like a debt consolidation loan or balance transfer credit card. Before doing this though make sure you do your research and see if it’s a suitable option for you.
Is it bad to pay off a credit card?
Absolutely not. In fact, paying off your credit card balance in full each month is the best way to use your plastic. It:
- Shows you’re a responsible and reliable borrower,
- Improves your credit score,
- Saves you paying interest, and
- Keeps your credit utilisation ratio down.
Can you pay off a credit card immediately?
Yes, you can. To do this, you just need to login to your online banking or head to your local branch (or mail a cheque if you still work that way) and deposit the funds directly into your credit card’s account.
There are a number of benefits to paying your balance early too, like:
- Reducing your credit utilisation ratio,
- Limiting the amount of debt that’s reported, and
- Saving interest (if your provider uses the daily balance or average daily balance method)
How can I pay off my credit card with low income?
Budget, budget, budget. Trying to get out of debt when you’ve got little disposable income can feel like a never-ending battle, but there’s light at the end of the tunnel (and without living off bread and water for the next month too!).
You could focus on one debt at a time, eliminating the source that’s costing you the most in terms of interest.
When you’re doing this, consider looking at what you’re spending each month and only spending your cash on essentials. You could:
- Curb unnecessary/frivolous purchases
- Eating in instead of dining out
- Buying in bulk to save on individual items
- Cancelling subscriptions you don’t use at all or enough
- Switching from brand to non-brand during your weekly food shop
- Hunting around for coupons
- Walking instead of driving to cut fuel costs
All the money you save can be used to chip away at your credit card balance quicker.
Can you negotiate a lower payoff amount on a credit card?
If you’re struggling to keep up with your credit card payments, you can try and negotiate with your credit provider as they may be able to help you by freezing interest, or simply exploring ways to help you make the payments needed to decrease the remaining balance.
It's worth noting that some providers may ask you why you can’t afford to keep up with your current repayments, ask for proof such household bills and a detailed breakdown of your income and essential living costs.
Tip: if you’re not sure where to start with this you can get free help from organisations like StepChange.
Disclaimer: All information and links are correct at the time of publishing.