Paying more than the minimum monthly payments on your credit cards and only using them for certain purchase are ways to lower your credit card debt.
Continuing from What You Can Do to Lower Your Credit Card Debt (Part 1), the following is some additional advice regarding what you can do to reduce your credit card debt and, ideally, improve your credit score and overall financial standing.
- Pay more than the monthly minimum payment – If you are only paying the monthly minimum payment on your credit card, you are essentially only paying off the accumulated interest on that card (i.e., you are not paying down the principal balance). This means that, if you continue with this practice, you could be spending hundreds to thousands of dollars more than necessary trying to pay down your credit card debt. To avoid this, make sure you are paying more than the monthly minimum payment on your credit cards – even if it’s only $20 more than the minimum. If you have multiple credit cards, consider focusing on paying more on the card with the highest interest rate first until that card is paid off.
- Only use your credit card for certain purchases – Instead of using your credit card to buy everything you need, you may consider only using it to make certain purchases, like your food and gas purchases. Limiting when you use your credit card can prevent you from overspending with it, allowing you to reign in the amount of new credit card debt you rack up each month.
- Consider using cash for some purchases – Although you may not want to always carry cash on your, it can be a good idea to use cash instead of credit cards to make some of your essential purchases. In fact, some studies have shown that people who use cash instead of credit cards are more aware of the amount of money they spend and, as a result, tend to spend less money in general.
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