There are advantages that can be derived from using credit cards. Added legal protection to cashback or being able to collect loyalty points are some of these benefits. Despite these advantages/ benefits, you will always find yourself in debt if you do not pay back the amount owed in time. This amount builds up really fast especially when you tend to go for numerous vacations and expensive shopping sprees.
Such maxed-out credit cards can be easily repaid with the following strategies in mind:
- Setting SMART goals
SMART goals refer to Specific, Measurable, Achievable, Realistic and Timely goals. When you are ready to start paying off your credit card debt, you set goals with these pointers in mind. You might be in a hurry to pay off the debt but when your finances are in a crisis, you will not be in a position to take care of all your other obligations.
Keep an open mind, and then make realistic plans towards paying off your high interest rate credit cards. It might take you longer than you ever anticipated, but this is the first crucial step that will leave you debt-free eventually.
- Stash your cards
Having the same cards that you are trying to clear debt off will tempt you to make more credit purchases and increase your debts. Pay off the outstanding debt first, then you may consider using it later if you’ll really need to.
- Cut Down on Expenses
The main reason why you have a maxed-out credit card is probably because of expenses you don’t really need. Track down your expenses and cancel out the things you do not need in your life. Within a month of well-balanced budgets, you will find extra money to pay off your debts.
- Consider Low-APR cards
You can use these to pay off your credit card debt when you think that you will take a longer time than the interest-free period to repay your credit card debt. Such cards offer lower interest rates compared to other cards. You or your financial adviser should consult with your merchant on their policies for payments. Most merchants will guide you through their policies on how to accept credit card payments.
Look out for merchants with low standard rate credit cards for the lowest APR cards they offer.
- Shun Minimum Payments
Opting for minimum repayment plans will keep you in debt for decades. Though these plans offer really low rates, they rarely include interests and charges as well as cover fees. When deciding on how to accept credit card payment plans, consider other available options before settling for the minimum payments.
- Prioritize your Debts
The current state of the global economy had forced most businesses to purchase assets on credit. After running credit risks, financial institutions offer them credit cards that they use for daily business transactions. As a manager, you might find yourself with debts all around you. In such a case, start by repaying your most expensive credit card debt then the cheaper ones can follow.
- Set Up a Direct Debit Account
This account will ensure that you never forget to pay. This also means that you won’t be charged a late payment fee. If you can afford to pay the full amount every month, this is the way you should go.
- Balance Transfer
If you have an existing debt, you might consider moving it to a balance transfer credit card. This card offers you a period that you won’t pay any interest. Therefore all your payments directly reduce your principal amount.
In conclusion, the key to full credit card debt repayment and debt-free cards is working within your means, setting budgets and only swallowing what you can chew! Manage your money matters wisely.
Bill Simmons is a Financial Consultant and one of the top Wall Streetgurus. He offers advice to business managers and financial controllers, especially banks. He serves in many boards and guides financial institutions on credit management. Read his book with tips and policies on how to accept credit card payments, ‘The Money Man’.