Paying off the full balance of your credit card each month might seem like a no-brainer. Date set. Interest and late fees averted. Job done. But it’s not always that simple. An unforeseen expense hits. A sudden loss or drop in income comes out of the blue. The cost of living just keeps on going up and up. But life happens, so what to do?
There are a few simple things you can do to help get on top of your credit card bill. With a little control, you can keep doing all the things that make you happy, whilst making your credit card work harder for you.
Begin by taking a good hard look at your monthly spend. Sit down, take some time and list your expenses out. Even a spreadsheet can help. Start with your income, then add all your different expenses. We’re talking fixed expenses, like rent or mortgage, groceries, utility and phone bills, council rates, medical and insurances, public transport and auto, schooling and sports. Then add the rest of the outgoings, like personal loans and yes, your credit card. And finally, unexpected expenses like car repairs, medical bills, extra school costs and the like.
Doing this gives you a clearer picture and greater understanding of your financial situation, and helps to set you up for where you want to be. It also allows you to see where you can shave off a few expenses here and there - thinking twice about some of the more non-essentials.
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Once you’ve listed out what you're spending your money on, your job now is to keep track, stay in control, and begin to see where you can save and spend wisely. You’d be surprised at how small things can start to add up, like subscriptions, account fees, hidden costs or mistaken transactions.
Tracking your spending can be far easier than you think. Track it every day, but do it over a period like a fortnight, month or even a few months. That way you can identify your spending habits. You can use a phone app, your monthly credit card statements, or simply just write it down at the end of each day. You’ll soon begin to see where your money is going, and start to see where you can save, perhaps finding cheaper alternatives or questioning some items you can do without. It also helps to start seeing and separating your ‘wants’ from your ‘needs’.
Ultimately, you can start to set limits. Creating a budget you can stick to will prevent overspending and help you take control of your money. It will even help to prepare you for larger expenses, and most importantly tackling your credit card debt.
So, you’re getting on track. You can see where your money is going. You’re finding opportunities to save money and spend less. Perhaps there’s even a little extra in the kitty. You’re taking back control. But of course, you still have your credit card balance to pay and it just keeps mounting up.
Well, here’s another simple tip that will help. Pay more than the minimum monthly amount. This not only saves you interest, but also means you can pay off the total balance sooner. The more you pay, the more you save, the quicker you are debt free. Only paying the minimum each month is indeed the slowest and most expensive way to tackle your credit card.
If, for whatever reason, you’re unable to make the minimum repayments, talk to your credit card provider who may be able to assist and help relieve some of the financial stress.
You might have a goal to have your credit card balance paid by a certain date. Or you might now have the funds to be able to pay above the minimum monthly amount. A credit card repayment calculator is a great tool to guide you on your quest. It can show you the monthly repayment required to pay your full balance within a given time period, or the time it will take with a given monthly payment amount. Either way it helps you reach your goal.
Another way to pay off your credit card sooner is a monthly payment plan. By setting up an autopay or direct debit, you’re giving your credit card repayment priority and making sure it gets paid down each month. Depending on your circumstances, you can approach your credit card provider and ask to increase or decrease the monthly payment. Keeping the payment regular, whatever the amount, still keeps you in control and still gives it priority.
Plan It™ Instalments is a built-in feature of your American Express Credit Card, that allows you to pay off your balance in equal monthly instalments, all at 0% p.a. interest and a fixed monthly fee1. You can start creating plans via the mobile app or in your online account. Best of all, it’s already on your Card, so you can keep shopping at the places you normally shop, and pay off the balance over time. Plan It™ fits in with the way you live and play, letting you use it for all your usual or unusual purchases. Learn more.
Following a few simple tips can help you keep on top of your credit card, make it work harder for you and ultimately better manage your finances.
Calculate your budget. Check your monthly income vs expenses to give you a clearer picture of your finances.
Keep track of your spending. It helps to see where your can save, set limits and avoid overspending.
Calculate your monthly repayments, pay sooner if you can. A credit card repayment calculator helps with the period and amount.
Plan It™ with American Express helps you to pay off your balance in equal monthly instalments at 0% interest.
There are other ways and strategies to help pay off your credit card. Some are simpler and easier than others. Ultimately, it’s about helping you to keep on track. And that’s not just healthy for your finances, it’s great for stress levels and your health too.