Jackie Gower - Wage war on your credit card!

Friday, February 17, 2012 1:52 PM

Paying off a credit card debt can seem horribly daunting but you may be pleasantly surprised to find it’s a lot easier than you think – as these tips from www.simplesavings.com.au (www.simplesavings.co.nz) show!

Pay off debts with highest interest rate first.Interest rates are the real killers on any bill.  If you have to pay off bills, try paying the minimum amount on your low-interest bills and pay as much as you can on your highest interest bills. You will save on the interest charges and get the nastiest bill out of the way first. Once you've paid off that bill, start on the one with the next highest interest rate. If any of them are credit or store cards, cut them up after they're paid off. The only people who get credit on credit cards are the people you're paying the interest to: they are in the business of making money. If you see something in a store that you really want, lay-by it and pay it off without interest!

Think about what you owe first. Instead of thinking about how much money you have left to SPEND on your credit card, retrain your brain into thinking how much you OWE. For example, Vanessa’s credit card limit was $4500 but she only usually had about $4350 on it - so she would think to herself that she had $150 to spend before exceeding the limit. Since Vanessa began thinking that she owes $4350 however, she hasn’t spent a single cent!

Wise up on credit card interest and save thousands.   There is a fantastic free credit card calculator available from a website called www.moneysmart.gov.auIt is easy to use and will demonstrate how banks make a horrendous amount of money from you. For example, if you have a credit card debt of $15,000 and are paying the minimum payment of $300 a month, that debt will take you 36.5 years to pay off. During this time you will also have paid the bank a whopping extra $16,807 in interest! However, by paying $320 per month (an extra $5.00 per week), you will have the same debt paid off in 5.5 years and will have parted with a much lower $5570 interest. A massive saving of $11,057!  You can fill out the information online or you can download it as an Excel spreadsheet. Try it out - you will be outraged, amazed, angry and inspired!