Best And Effective Ways Of Paying Off Your Credit Card Bills

Using a credit card can be a luxurious experience and allow you to make cash-free purchases. Using a credit card responsibly can increase your CIBIL score and give you a healthy credit rating. When you do not make credit card bill payments on time – it can have exactly the opposite effect. Moreover, it can land you in heavy debt with spiralling interest rates, leaving you with no other option but a settlement, further damaging your credibility. Let us look at some of the best and most effective ways of paying off your credit card bills.
Always Pay More Than The Minimum Amount Due
This is the tried and tested method to reduce credit card debt or avoid it altogether. If you can pay off whatever amount you have used on your credit card within 30 days, you will have no interest to pay and increase your credibility. However, if you cannot make the complete credit card bill payment, do not just pay the monthly minimum due.
This amount is just the interest on the amount use. In other words, paying the monthly minimum will keep the phone calls from debt collectors away, but your principal due amount would not reduce. You will just be paying interest month on month in an endless vicious cycle. On the other hand, paying off a credit card minimum due plus whatever you can afford will steadily decline the principal utilised amount.
Stick To A Budget
When you make a monthly budget and stick to it, your credit card expenses will never go out of control. While unforeseen expenses occur with medical situations and unplanned events, factoring them into a monthly budget can allow for such occurrences without putting a dent in your credibility. Set aside a date every month, maybe close to your salary date, that you pay off the planned and utilised credit card expenses without paying any interest.
In today’s digital world, online credit card payments are the way to go for the amount to be immediately reflect in your credit card app/statement. Cash payments at branches incur processing fees, GST of 18%, and sometimes a delay in reflecting on your statements. Cheque deposits can take even longer to clear and reflect. An online payment using the bank’s app or the net banking facility is a quick, smart, and efficient way to make your credit card bill payment a hassle-free procedure.
Follow A Debt-Reduction Plan
If you have found yourself in a mountain of debt, do not worry. Rome was not built in a day, nor will a debt-free life, but it is not impossible. Two proven debt-reduction plans include the snowball strategy and the avalanche strategy. They can be applied if you have multiple credit card bills piled up.
The snowball strategy suggests you pay off the credit card bills payment starting with the highest possible amount on the card with the lowest balance. Next, apply the same to the next-lowest card payment. Using this strategy, you will soon start clearing your credit card dues with snowball-like momentum.
On the other hand, the avalanche strategy suggests paying the highest-interest card all that you can afford first and then moving to the next-highest interest card. It might take you longer, but you will end up paying less on interests.
Consolidate Your Debts
If your income does not allow you to utilise the two strategies mentioned above, you could consolidate your credit card debts by taking a single personal loan to clear all dues. This way, you would have to make just one EMI payment monthly. Doing so will reduce stress, and you would probably pay less interest as well.
Moreover, personal loans are usually cleared on a given date every month (loan EMIS is auto-cleared with online payments), eliminating the hassle of tracking multiple payment dates every month. Once you have cleared your debt this way, you can focus on rebuilding credibility using a new credit card with a low spending limit.
Conclusion
A credit card can be a luxury, but it must also be used with care, precaution, and responsibility. Making timely credit card bill payments keeps you on track and interest-free. If you land in a mountain of debt, using proven debt-reduction strategies or consolidating your debts can bring the situation back under control. More often than not, making your credit card payments online ensures a quick reflection on the payment status and eliminates the possibility of any other processing fee or GST payments.
If you have credit card debt and a little extra money, you might be unsure about whether it’s best to pay it off all at once or over time. Wouldn’t it be better to pay off your debt gradually if you’ve heard that having a balance is good for your credit score?
Nearly always, the answer is no. Your credit will remain in good standing as you save money on interest payments by paying off credit card debt as quickly as you can. Continue reading to see why this is important and what to do if you are unable to pay off your credit card debt right away.
Debt can occasionally be beneficial for improving your credit score or achieving objectives (like buying a house) that would be challenging to complete without a loan. But having a lot of additional debt can hurt your credit score and result in interest charges you didn’t plan to make. Celebrate each additional payment and the repayment of debt.