What’s more important? Saving money or paying down debt? Experts say ideally you should be doing both. But according to a recent survey, some Americans don’t earn enough to do both, so eight in 10 Americans are choosing to pay down debt.
How can you keep credit card debt from rising? The Kansas Credit Union Association offers these four-letter words to keep your credit card debt under control.
MORE Did you know that by paying just $20 more than the minimum payment can drastically reduce the time it takes to pay off a credit card balance? If you owe $3,300 on a credit card at a 14.96% interest rate, it will take almost 20 YEARS to pay off the debt if you only pay the minimum balance. And it will cost you $7,600, more than double the amount of the debt.
By paying just $20 more than the minimum amount, you pay off that card in four and half years, plus you’ll save about $3,000 in interest fees.
HIGH Got a card with a high interest rate? Pay off that card first, even if other credit cards have larger debt. And, if you can, double, triple or quadruple that minimum payment. The amount of debt doesn’t matter when you are paying a hefty interest rate.
PAID Have a card with a small balance? One that can be paid off easily? That’s a great start too. There’s something emotionally gratifying about paying off a credit card. It can get the ball rolling and encourage you to pay off all your credit cards.
TIME This is a no brainer. Make your payments on time. Making a late payment could result in a fee. And being 60 days overdue could result in a late penalty fee, which increases your interest rate on that card. What many people don’t know is that penalty fees could affect your other credit cards, even if those cards have no history of a late payment!
BILL Review your credit card bill regularly for unnecessary fees and call the credit card company to see if you can get them waived. Sometimes a company will waive fees to keep customers.