How to Stop Paying Credit Card Interest

Using a credit card is essentially having a type of loan that you can readily access to make purchases at any time up to a given limit. As with any loan, credit cards attract a certain amount of interest, which is factored into the repayments.

 

Your interest is usually stipulated in your contract and is determined by a number of factors including the kind of credit card you have and the frequency of your repayments. Some credit card vendors will calculate your interest on a purchase-by-purchase basis. Others will work out your interest based on purchases made in a given period.

 

If you don’t make your credit card payments in time, interest is charged and if you don’t pay in subsequent months, interest will be charged on top of the interest initially charged. This is how some credit card owners find their debt growing to unmanageable levels. You will be wise to do your calculations and honor your dues.

 

Here are the key ways you can keep credit card interest from spiraling out of control:

 

 

Reduce Expenses

Keeping your purchases down to essentials is one way of keeping your credit card interest low. You can set a cap on your monthly credit card spending so that you always know at the back of your mind how much is available to you to spend.

 

When it comes to credit card purchases, you should be guided by this rule of thumb; only buy the stuff you can afford to pay back.

 

If you’re keen on eliminating credit card interest, making cash withdrawals or credit card checks with your credit card should be an absolute no-no. These attract higher interest in addition to a number of extra charges. If you don’t quite trust yourself to be so disciplined, activate blocking features that credit card vendors offer to help curb cash advances.

 

Other types of cash advances you can get from your credit card include gift cards, traveler’s checks, and moving money from your card to a different account. You can also use your credit card to pay bills online or over the counter. However, you would rather fund these from your bank account or other sources than risk ramping up your credit card interest.

 

Another way you can eliminate interest while using your credit card is by taking advantage of the interest-free periods on purchases some banks and vendors offer. As long as you pay the amount in full at the end of the month, you won’t be charged any interest.

 

 

Pay More Than the Minimum Payment

You don’t need to wait until your payment is due to make your credit card payment. Whenever you get the funds, you can channel them there to make sure you don’t accrue any interest. To be sure you never miss a payment, you can give standing instructions to your bank or set up a direct debit yourself on online banking.

 

As you set up these monthly debit instructions on your account, make sure it’s for an amount at least equivalent to your minimum payment. However, financial experts advise against doing this bare minimum as it will have less of an impact on your credit card debt. It will therefore take you much longer to clear your balance even if you lay off using your card for purchases.

 

Paying just the minimum repayment will put you in line for a call from your credit card provider. They will ask you to up your repayments so that your repayments cater for not just the interest and fees, but also go to reducing your actual balance. Ignoring their calls and sticking to the minimum amount could lead to the suspension of your account.

 

Failing to stay on top of your payments could eventually lead to a mark on your credit rating, which will jeopardize your chances of getting a personal loan or mortgage in the future.

 

Priorities Versus Interest

If you have more than one credit card, you’re well-advised to prioritize the ones with the highest interest. These will usually be the ones issued by retail stores. If you’re not sure about the interest rate on your card, you will find it in your credit card statement. It may differ from what was on your contract as it varies depending on your purchases, the balance on your card, and if you took any cash advances.

 

Should you feel your interest is spiraling out of control, you could think about signing up for a payday loan alternative. The extra cash could help you get on top of your repayments until you’re in a position to do so from your own resources.