Time To Pay Your Bill!

So, you've had your credit card for a while.  You've used it, possibly even too much.  Now it is time to start paying it off.  Unfortunately, the joy you probably experienced while you were charging up a storm is about to turn into dread.  Paying off a credit card is a whole lot harder than charging one.  There are some options that you have, as well as some tips to make the whole ugly process go a little smoother.

How To Pay Off A Balance

Of the people who carry a credit card, about one-third of them do not pay off their balance each month.  If you're one of these people, you may have noticed that even though you pay the minimum payment due each month, the balance either never changes or even continues to grow.

Just why does this happen, you may ask?  Well, let me let you in on a little secret the credit card companies hope it will take you a long time to figure out.  The amount of your minimum payment is usually equal to the interest only that is due on your balance.  It may even be less.  So, even if you're paying your minimum amount on time each month, none of that payment is actually going to the principal.  At this rate, you'll never pay off your card.  So, let's go over a couple of tips that may help you put a dent in your balance.
 
First, quit using your card.  If you need to make some changes in your lifestyle, then do it.  Unless it is truly an emergency, don't use your card for anything.  Charges will only keep the vicious cycle going.

Pay more than the minimum payment due.  For reasons stated above, this is critical to eliminating credit card debt.  If you can, transfer your card to a card that has a lower interest rate.  These applications come in the mail all the time.  Just remember, this new card isn't for charging.  It's to be used as a tool to pay the balance off.

Payment Agreements

When you apply for any credit, there are several different payment agreements that you can opt for.  The first is the revolving credit agreement.  This basically means that you can either pay off the card each month or make only partial payments.  If the balance is not paid off though, you will be charged an interest rate on the balance.  This is the most popular form of payment agreements.

The second kind is the charge agreement.  This is set up so that you are required to pay off the balance in full each month and the third agreement is the installment agreement.  This allows you to pay a fixed amount of the balance each month until the balance is paid in full.

Choose a payment option that will work best for you and proceed wisely.  Nothing ruins your credit score like a bunch of late payments!