How To Pay Off A Credit Card

| Category: Debts In Bankruptcy
Category: Debts In Bankruptcy | Leave a comment

Do you want to know how to pay off a credit card and get out of debt sooner?  Here are some debt repayment strategies, do’ s and don’ts to get you out of credit card debt sooner.

#1 Tip On How To Pay Off A Credit Card?

Pay more than the minimum.  Did you know that almost 50% of Canadians with a credit card balance say they always or often carry a balance on their credit card?  More than 1 in 8 of those pay only the minimum balance or less.  This is a sure-fire way to keep you in debt longer and cost you a lot of money. If you want to know how to pay credit card debt faster you should understand how minimum payments work and how much they will cost you. Most credit cards calculate their minimum payment as a percentage of your balance — usually between 2% and 3% — or $10 whichever is less.  If you pay only the minimum on your credit card each month you will end up paying almost DOUBLE the amount of your original debt.  Here are some examples:

Original Credit Card Balance $28,000 $10,000 $5,000 $2,000
Interest $27,800 $9,800 $4,800 $1,800
Total Payment $55,800 $19,800 $9,800 $3,800
Years in Debt 28 years 4 months 22 years 8 months 18 years 10 months 13 years 10 months

#2 Use A Credit Card Repayment Calculator

The best way to pay off a credit card is to pay your balance in full by the due date each month. But if you can’t afford to pay off your credit card in full each month, a better option is to pay a fixed amount each month, as much as you can afford. To keep you on track, use a credit card repayment calculator to understand how long it will take to pay off your credit card under different payment options. This will help keep you motivated. For example, let’s say you owe $10,000 on your credit card. Paying only the minimum payment we know it will take you almost 23 years to pay off your credit card.  But if you are able to pay $300 each and every month (the same amount as your first minimum payment would be) then you would pay off your entire credit card debt in just 5 years and 3 months saving a significant amount in interest.

#3 Consider A Consumer Proposal

If you find yourself unable to make reasonable fixed payments each month to pay off a credit card and are looking at years of credit card debt then your next alternative is to talk to a professional to see if a consumer proposal would be a way for you to settle your credit card debt.  Your payments under a consumer proposal would be considerably less than they would be under any self-repayment program and often less than those negotiated by credit counselling agencies.

If you are having difficulty paying off a credit card, contact one of our local Ontario bankruptcy trustees see how a consumer proposal can help you discover how to pay off a credit card debt.

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