How to Make Extra Payments on a Credit Card
Credit cards, though sometimes helpful, prove challenging to pay off when carrying month-to-month balances. Paying only the minimum payment with a balance of $5,000 and an 18 percent annual percentage rate (APR) would equal nine years of payments and over $2,000 in interest, according to the Federal Trade Commission's Credit Card Calculator. Making extra payments is how to more quickly free yourself.
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Things You'll Need
- List of your monthly expenses
- Credit card balance and interest rate information
Instructions
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Evaluate your budget. Total the money you spend each month on non-essentials like eating out, new clothes and pay-per-view movies. Make it your goal to use that money for extra payments on your credit card.
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Use any additional money you happen to receive to make an extra payment. For example, if you get a tax refund check, or birthday cash, use it towards your debt. It doesn't matter when you make the extra payment. In fact, the best time is when you first receive the money.
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Make extra payments to the card with the highest interest rate first, then look at others. Employing this strategy will actually save more money. That's because you won't pay the higher rate of interest over a longer period of time.
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Tips & Warnings
Utilize an online payment system if your company offers one. This is a convenient way to make extra payments as you desire.
Once you are debt free, you can use the money you were putting toward payments on other things you want.
When you zero your balance, avoid using credit for non-essential purchases. If you do, make a point of paying off the balance each month.
References
- Photo Credit wallet and credit cards image by CraterValley Photo from Fotolia.com
