How to Pay Off Credit Card Debt Faster and Understand Credit Card Bills

If you do not pay the entire balance on a credit card you are going to owe more money to the credit card company than what you borrowed to begin with.

When you buy an item using a credit card what you are doing is borrowing the money from the credit card company to pay for the item you are buying.

If you only pay the minimum payment each month you might never pay off the entire balance of your credit card!

If you are not able to pay the entire balance due on your credit card you should learn how credit card companies calculate your payment so that you can make the minimum payment plus the interest that has accrued for the month. If you do not pay the interest that has accrued in addition to the minimum payment, the interest will be added to your balance and next month you will be paying interest on last months interest! That process could go on forever.

Read below to see a simple way to calculate a faster way to pay down your credit card debt.

Difficulty: Moderate

Instructions

Things You'll Need:

• Calculator
• Determination

1. On your credit card statement you will look for several important numbers: New Balance, Minimum Payment, Finance Charges.

2. If you have the funds to payoff the entire balance, do it! If you don’t you can end up spending twice as much for whatever you bought by the time you pay it off.

3. If you only have enough to pay the minimum payment, pay it and pay it early or on time. Then plan on putting more money aside next month to get rid of this debt sooner.

4. If you want to eliminate this debt as quickly as possible but you can’t pay the entire balance, take the minimum payment and add the amount shown as Finance Charges. Make this your monthly payment. This way your New Balance will not be even higher next month because you have paid the interest rather than having it added on to the amount you already owe.
   
   This is the secret to paying down the debt faster when you can’t afford to pay off the full balance that you owe!

5. If you can make more than one payment per month, do it! The more you pay off the less interest you will be charged the following month on any balance you carry over.

Tips & Warnings

• If you use Convenience Checks that some credit card companies offer to their customers, read the small print and then go back and read it again! Many companies have changed their offerings and the extra charges that go with them.
• Also, be aware that if you withdraw large amounts of cash from a credit card account using Convenience Checks, the credit card company may immediately lower your Credit Line amount and change other features of your account.
• If you go over your Credit Line amount or if you are even one day late making your monthly payment you automatically void any special offers on most credit cards including the reduced interest rate you may have been offered.
• Be very, very careful when taking advantage of any special offers with your credit cards! Read everything and then read it again!

[juliemcmurchie]

on 10/31/2009 Good tips for reducing credit card debt.

[skyedanzer]

on 10/21/2009 Great idea on adding the finance charge to the current monthly payment to prevent the balance from creeping up higher and higher. Great instructions.

[thimbletack]

on 8/24/2009 very helpful,I am finally getting ahead of the credit game thanks to this article,thank you

[waters]

on 7/6/2009 Great information; on how to pay off credit card debt faster 5* and recommended.

[gahazeleyes]

on 6/9/2009 I was just talking with a friend about this! Thanks for confirming.