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Three smart steps to 'kill' your credit card debt

Credit cards – When used properly, they can help you achieve your financial goals and make budgeting easier.

However, if you do not use them properly, not only you may end up paying a (quite high) interest rate – you might also be faced with a long-term drain on your finances.

If you’d like to free up your money for the things you really want or need, don’t miss these three smart tips.

Pay off your credit card in full

It may sound obvious, but if you want to avoid paying interest, this is the number-one thing to do. For example, if you use your credit card for personal spending (perhaps to earn Airpoints, or see you through a tight financial period), make sure you have the funds available on the payment due date to clear the balance and avoid making minimum regular monthly payments for the foreseeable future.

Pay more than the minimum payment

Unable to clear the balance in full? It’s a good idea to pay as much as you can, as often as you can. Paying only the minimum required payment each month will see you paying off the credit card debt for many years, and also paying back just about as much as you originally used, in the interest charges.

Even if you can only pay an extra $10 per week, why not do it? The more you pay, and the more frequently you pay, the quicker your debt is paid off, and the less interest you will pay overall.

Don’t spend it again

Cut up your credit card. Or freeze it. Once you make payments, it’s easy to think the available balance is yours to freely spend again. But if you want to be free of your credit card debt, consider the payments as ‘dead’ money that is reducing your debt, and not just putting money into it to spend again in the future.

Owing money on your credit card might feel like the norm, and you may get used to that minimum payment going out each month – but with an action plan and a focus, you can get rid of the debt, freeing up your disposable income.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek financial advice.

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