What Is The Minimum Payment
My bill says the Minimum Payment is $25.00. If I can just make the minimum payment due, why would I want to pay any more than that?
Some cardholders make the mistake of thinking the Minimum Payment is the amount they should pay each month. All you need to do is look at this table on my credit card statement to see why thats a bad idea:
If I were to only pay the credit card minimum payment, it would take me seven years to pay off this $1,258.56 credit card bill! And, Id end up paying over $750 in interest charges during that time!
Since 2011, credit card companies have been legally required to include this table on credit card statements to help you understand why its a bad idea to only pay the minimum. Even in the second example on the table, paying a little less than double the minimum, it would take me three years and cost me about $325 in interest. Not a smart move. Heres how those numbers look on a graph:
Introductory 0% APRs
There is an exception where it might make sense, at least financially, to only pay the minimum monthly payment. If you use a card with a 0% intro APR offer, whether its a card with a 0% APR on purchases or a card favorable to balance transfers, youll have some time when the bank doesnt charge interest. In this case, its important to at least pay the minimum each month so the bank still considers your credit card account in good standing, with no late or missed payments.
Heres a simple plan you could use for 0% intro APRs:
Make Your Payments On Time
You can choose to pay your balance in different ways including:
- in person at a branch
The payment method you choose can affect how quickly it’s processed and the date it’s considered paid. The time it takes to process your payment will vary depending on your financial institution and the payment method you choose. Make sure you know when your payment will be processed to avoid making a late payment.
Contact your credit card issuer to find out how long it takes to process different payment methods.
If Your Iphone Or Ipad Is Unavailable
If your iPhone is missing or stolen, you can to make a payment. You can also ask an Apple Card specialist to help you set up scheduled payments so you won’t miss a payment.
If you added your Apple Card to another iPhone, you can make a payment or set up scheduled payments in the Wallet app on that iPhone. If you added your Apple Card to your iPad, you can go to Settings > Wallet & Apple Pay > Apple Card, then tap Make a Payment or set up Scheduled Payments.
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How Does A Balance Transfer Work
With a balance transfer, you’re merely transferring the balance of one card to another. The main reason for doing so is to consolidate debt from a higher-interest card to one with lower interest.
Many credit card issuers have special balance transfer offers to invite people to open cards with them. The offers might include 6-15 months with a zero percent introductory APR. So for people who are looking to paying off their balance within the promotional window, a balance transfer can be an excellent choice.
You’ll want to be cautious of balance transfer fees, though, which can sometimes be up to five percent of the amount transferred. It’s also critical to check the interest rate you’ll be charged after the promotional period ends and to look into how a balance transfer may impact your credit score. Make sure you read the cardmember agreement and reach out to your lender to verify specifics before making the transfer.
How To Apply For The Tj Maxx Card
You can apply online or at any store for the TJX Rewards card, but if you have the credit score for the Platinum Mastercard, they can offer it to you. Also, if your application for the Platinum is unsuccessful, you might be offered the Rewards one instead. You can win points with both via reward certificates.
Terms and conditions for either card are the same. The variable APR is high and can fluctuate depending on the prime rate. If the prime rate goes up or down, the APR will follow suit.
As a nice welcome bonus, youll get 10% off your first purchase in stores and online, once youre approved for a TJX Rewards card. Youll also start to earn points in the rewards program. When you hit 1,000 points, TJ Maxx will award you with a $10 Rewards Certificate, which you can use at the store, and also at Marshalls, HomeGoods, Sierra Trading Post, and Homesense stores. Cardmembers are also invited to participate in exclusive shopping events.
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To Maximize Financial Return Pay Later
Many Americans do pay off bills in full and many keep monthly spending well below the recommended threshold of 30%. People who do these two things reliably are more likely to have a favorable credit score. These routinely-responsible cardholders dont benefit much from rushing to pay off monthly bills.
Instead, late-cycle-payers can likely afford to take full advantage of the credit extended to them each month. Of course, the bill total will stay the same throughout a billing period, but cardholders can benefit from the time value of money extended to the amount owed. This value comes from the concept that there is value in simply holding a sum of money over time, based on its potential to earn.
Up until the time cardholders actually pay the bill, credit card users can still earn interest on the money owed. Whether that money would otherwise be invested somewhere or held in a checking account, the additional interest this would garner can add up to a significant sum over months and years. So, for cardholders unburdened by debt or a waning credit score, waiting to pay until close to the end of a billing cycle will almost certainly increase overall wealth, if just by a little at a time.
Monitor Your Credit Card Accounts
Keeping track of your credit card accounts and bills can become more complicated if you have several cards. Creating a budget and using budget software that lets you link and sync multiple accounts can help you stay on top of your spending and balances. You can also sign up for Experian’s free credit monitoring service to review the balances on your credit report and get automatic notifications if there are any suspicious changes.
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Other Tips For Managing Your Bill
Aside from keeping an eye on your credit utilization and making a payment when it starts to get too high, here are a few other pointers for managing your credit card bill:
Keep a budget and track your spending. This way, youll keep from spending more than you can afford to pay off in one month.
Sign up for text or email alerts from your issuer to keep tabs on your balance and your billing due date.
Review your statement carefully every month. This will help you spot and correct unauthorized charges if they arise.
Set up automatic payments. This can help you avoid accidentally missing a payment due date.
To Pay Less Interest On Debt Pay Asap
Credit card users who always follow Rule #1 need never worry about paying interest. But for those carrying a balance, its important to know how the amount of interest owed is determined. Each month, credit card companies take an average of the balance owed by a cardholder on each day of the billing period. This is known as an average daily balance. This number is applied to the cardholders specific interest rate.
Out of convenience, cardholders in debt sometimes wait until the due date of their next bill to finish paying off the previous months balance. This means that for every day the payee might have had the money to pay even part of that bill off they were still on record as owing the full value of their balance. If instead they paid off their balance halfway through the billing period, their average daily balance for that period would drop by half. If halfway through the period they were able to pay off, say, only a quarter of their debt, they could still reduce their average daily balance by over 12%. Any amount paid down at any time during the period can reduce the daily average balance.
Rather than deciding to pay at the beginning or the end of their billing period, cardholders in debt should simply keep working away at what they owe as they can, knowing that its not just the total paid off at the end of the month that matters, but the timing, too.
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Is Your Credit Card Costing You Too Much
Whether you’re paying off existing debt or considering using a credit card to finance a new purchase, you may be able to save hundreds—even thousands—by taking a minute to shop for the best credit card for your situation.
Visit our partner, Cardratings, to compare balance transfer credit cards which offer 0% intro APRs for 18 months or more on transferred balances. Likewise, if you’re considering financing a new purchase, see the top 0% intro APR credit cards offering 12 months or more of interest-free financing.
Need longer than two years to pay off an existing debt or a new purchase? A fixed-payment personal loan may charge less interest than a credit card. See our list of the best personal loans for debt consolidation.
How Do I Pay Off Debt With The Snowball Method
With the debt snowball, youll pay off your debts in order from the smallest balance to the largest. Heres how it works:
- Step 1: Make the minimum payment on all of your accounts.
- Step 2: Put as much extra money as possible toward the account with the smallest balance.
- Step 3: Once the smallest debt is paid off, take the money you were putting toward it and funnel it toward your next smallest debt instead. Continue the process until all your debts are paid.
Many people love this method because it includes a series of small successes at the beginning which will give you more motivation to pay off the rest of your debt. Theres also the potential to improve your credit scores more quickly with the debt snowball method, as you lower your credit utilization on individual credit cards sooner and reduce your number of accounts with outstanding balances.
With this approach, you take aim at your smallest balance first, regardless of interest rates. Once thats paid off, you focus on the account with the next smallest balance.
Think of a snowball rolling along the ground: As it gets bigger, it can pick up more and more snow. Each conquered balance gives you more money to help pay off the next one more quickly. When you pay off your smallest debts first, those paid-off accounts build up your motivation to keep paying off debt.
Example of the Debt Snowball in Action
Lets take the same accounts we used in the first example.
|Type of Debt|
To use the debt snowball method:
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Map Out A Repayment Plan With A Debt Avalanche Or Debt Snowball
There are two main schools of thought when it comes to credit card debt repayment.
The first, the debt avalanche method, focuses on paying off your cards with the highest interest rates first, and then, once those are paid off, moving to those with the lowest interest rates. This approach makes the most mathematical sense, since youre shortening the amount of time youre paying off the credit cards that are charging you the most money.
The other tactic is the debt snowball method. This is specifically for people who struggle to stick to a debt reduction plan when there seems to be no end in sight.
Popularized by personal finance expert Dave Ramsey, the debt snowball focuses on paying off your smallest debts first, then your next-smallest balance, and so on. According to some behavioral economists, eliminating small debts early on in the paydown process can be a worthwhile mental reward that helps some people stay motivated to stick with it.
This isnt quite as cost-effective as paying off the high-interest debt first, but if it gives you the motivation to buckle down and pay off your debts, it might be the preferred route.
Paying Credit Card Bills Bottom Line
The credit card billing cycle can be confusing for anyone, but as long as you remember three basic rules, youll be fine. First, only payments that are more than 30 days late are classified as late on your credit reports, so missing a payment by a few days shouldnt be a source of stress. Second, interest accrues on a daily basis when you dont pay your bill in full and on time every month. Paying as much as you can as early as you can is therefore essential to minimizing finance charges. Third and finally, budgeting is the best way to avoid overspending and being surprised by your credit card bill, so make one and stick to it.
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How To Pay Off Credit Card Debt
This article was co-authored by Benjamin Packard. Benjamin Packard is a Financial Advisor and Founder of Lula Financial based in Oakland, California. Benjamin does financial planning for people who hate financial planning. He helps his clients plan for retirement, pay down their debt and buy a house. He earned a BA in Legal Studies from the University of California, Santa Cruz in 2005 and a Master of Business Administration from the California State University Northridge College of Business in 2010.There are 23 references cited in this article, which can be found at the bottom of the page.wikiHow marks an article as reader-approved once it receives enough positive feedback. In this case, 100% of readers who voted found the article helpful, earning it our reader-approved status. This article has been viewed 981,490 times.
It may seem easier to just ignore it, but your unmanaged credit card debt will haunt every step you take. It may sound like a daunting task, but you can pay off your debt with order and dignity! To attack your debt effectively, use the following strategies.
Staying On Top Of Your Credit Card Bills Is A Key Part Of Building And Maintaining Strong Credit
Payment history is a key component of your credit scores and missing even one payment could have an impact that includes late fees or a higher interest rate in the future. Fortunately, it doesnt take too much effort to manage once you know what to look out for.
So what, exactly, do you need to know about paying your monthly bill? Heres a brief overview that can help you get and stay on top of your payments.
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Get A Balance Transfer Credit Card
If you have a high credit score, you might be eligible for a card that can help you pay down your outstanding balance sooner.
Balance transfer credit cards offer 0% introductory APR rates for a promotional period this varies, but 12 to 18 months is the norm. This intro period gives you a window of opportunity to pay down your debt quickly: Since youre not paying interest, your entire monthly payment goes straight towards paying down the principal. Make it a priority to pay down your balance before the promotional period ends, though especially if the non-introductory APR rate is on the high side.
A caveat: A balance transfer credit card that also offers 0% APR on purchases might seem like a nice perk, but its important to focus on your top priority .
Also, know that many balance transfer cards charge a balance transfer charge of at least 3% of the balance youre transferring an amount that can add up if you have a large amount of debt. Look for cards that have low or no balance transfer charges, and more of your money can go towards servicing your debt.
Ways To Pay Off Your Debt
You can start paying off credit card debt by choosing a strategy, reducing your spending and making a few key changes.
Choosing a Debt Payoff Strategy
Creating a plan can help you figure out what works best for you and even help provide motivation. There are two basic strategies that can help you reduce debt:
- Pay off high-interest debts first. Using a strategy sometimes called the avalanche method, youâll make the minimum payments on all your debts, but put extra money toward the balance with the highest interest rate. This can help you save money in the long term because high-interest debts are more costly.
- Pay off the smallest debts first. If you need to build momentum in your debt payoff plan, the snowball method might make more sense. With this strategy, youâll again make the minimum payments on all your debts. But then focus on putting any available money toward paying off your smallest balance first. Once youâve paid that off, you can dedicate any funds that have been freed up to your next smallest debt and so on.
Reducing Your Spending
When you reduce spending, you can put more money toward debt and potentially even save money on interest. Here are some ways to track your spending and cut down on expenses:
Switching to Cash Only
Consolidating or Transferring Your Credit Card Debt
Itâs also a good idea to check whether the card charges any fees and understand the cardâs terms and conditions before you apply so you can make a fully informed decision.
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