Your billing statement came yesterday and you were shocked. You just paid $200 on your credit card bill last month, but only $160 was applied to your balance. You feel like you just threw away money on top of dealing with the risk of penalties and additional charges.
You're not alone. Credit cards can quickly add up and often require large payments to pay them off. If you pay the minimum, you'll pay on the card for an extended period that allows the company to collect the most possible interest.
Interest rates have the potential to cost you hundreds or thousands of dollars. This is why it's a good practice to use credit cards only when you know you can pay them off in the next few months. Debt that climbs higher and higher can feel overwhelming and could hurt your credit score.
How can you turn around this money trap? Start paying off the card with the highest interest rate. Put as much money into a payment as possible, so you can see a real reduction in what you owe. For example, if you owe $1,000 and can pay $25 a month as your monthly payment, try paying $100 a month instead. You may take around a year to pay the card off by paying $100 a month, but it's far longer with a $25 per month payment.
Another thing to try is getting a balance-transfer credit card. These cards typically have a zero percent interest rate for a few months. That means you can transfer a balance and work on paying off the principal instead of the interest.
These are just a couple tips for paying down your cards. Your attorney can help you explore other options if you feel you're in over your head.
Source: Credit.com, "How to Pay Off Your Oppressive Credit Card Debt," Jeanine Skowronski, accessed May 19, 2017