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Can You Use A Credit Card To Pay Your Rent
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For most people rent is one of, if not the most important bill that needs to be paid each month. If you dont own a house or condo then you probably pay to rent your home and the monthly payment process may sometimes seem a little bit tedious. But the good news is that as payment technology grows and evolves there are new ways for landlords to receive payment from their renters.
How Does A Credit Card Work
A credit card allows you to spend money up to a pre-set limit. Youll get a bill for what youve spent each month.
Its important to try to pay off the balance in full every month. But youll need to pay off at least the minimum amount.
The minimum is set by your credit card provider, but must be at least 1% of the outstanding balance, plus interest, any default charges and the annual fee . Most of the time it will be between 3 and 5%. It might also be set as a pound figure of at least £5.
If you pay off the bill in full, you wont pay any interest on what youve borrowed unless you have used your credit card to withdraw cash.
If you dont pay off the bill in full, youll be charged interest which is usually backdated to the date of your purchase
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What Could Happen If I Miss A Payment
Missed or forgotten credit card payments can happen to anyone. But it can be helpful to know the potential impacts. Missed payments could lead to more than just late fees. They can also affect your credit scoreâespecially if youâre late by more than 30 days.
If you miss a payment, your credit card company may send you notices about it. These could be in the form of calls, emails, letters or texts.
Even if you donât hear from your credit card company, you may still be charged a late fee. And the late fee may increase after the first time you miss a payment. In fact, the amount might increase each time a payment is late again within six billing cycles. To find out exactly how much your cardâs fees are, you can check the terms and conditions of your credit card.
Best Times To Make Credit Card Payment
The saying timing is everything definitely applies to your credit card payment. Late payments come with quite a few consequences you should avoid if possible. Not only will you incur late fees if you pay past your due date, but you also risk damaging your credit and having your interest rate increased to the highest penalty rate.
The timing of your credit card paymenteven when you pay on timecan also impact the amount of interest you pay when you carry a balance. Paying earlier in the billing cycle can reduce the amount of interest you pay and boost your credit score in some cases. If you’re trying to decide the best time to make your credit card payment, here are some guidelines.
Make At Least The Minimum Payment
Make at least the minimum payment if you cant pay off your balance in full. The minimum payment is the minimum amount you have to pay each month on your credit card balance.
You minimum payment will be either:
- a flat dollar amount, usually $10, plus any interest and fees
- the higher of a dollar amount, typically $10, or a percentage of your outstanding balance, typically 3%
Your credit agreement will tell you which method your credit card issuer will use to calculate your minimum payment.
Paying only the minimum amount you owe means:
- it will take you longer to pay off your credit card balance
- you’ll pay more interest
Increasing your monthly payment by even a small amount will shorten the time it will take you to pay off your balance by a lot.
Paying Off A $2500 Credit Card Balance With Minimum Payments
Imagine you have $2,500 in credit card debt and a 17% APR that you want to pay off with minimum payments. If your credit card has a 3% minimum payment schedule, your first payment would equal $75. Should you continue paying only minimums, it would take 9 years and 7 months to pay off the debt. You would pay a total of $4,293 with 58% of payments going toward the principal debt while 42% goes to the $1,793.66 in accrued interest.
As you can tell, the interest rate is holding you back from paying off your credit card debt. Hence, it makes more sense to pay off a card when you can or pay a little more each month to keep interest minimized. Otherwise, your minimum payments only end up covering your accrued monthly interest.
Talk to a debt relief specialist to find better ways to pay off your credit card debt.
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Early In The Billing Cycle
Your due date may fall later in the billing cycle, but paying your credit card early in the billing cycle can reduce the amount of your finance charge, especially if you dont make any other purchases during the billing cycle. Heres why: your credit card issuer likely uses either the daily balance or average daily balance method to calculate your finance charge. In both cases, having a lower balance for more days in the month will result in a lower finance charge.
You can find your account statement closing date and number of days in your credit card’s billing cycle on your credit card statement.
Strategies When Accounts Are 6 Months + Overdue
Once your account has been unpaid for six months or more, your creditor has several options and will do one of the following:
- Continue collection efforts using its in-house collection department
- Hire a collection agency to collect your account on a commission basis
- Sue you
- Sell your outstanding account
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The 0% Period Will End
Eventually, that promotional interest-free period will come to an end. If you havent made much progress in paying off your debt, you could find yourself stuck paying an even higher ongoing interest rate. Before you transfer a balance to a new card, make sure that youll be able to pay it off within the 0% APR period.
Theres Often A Balance Transfer Fee
Balance transfer fees typically range from 3% to 5% of the amount being transferred. If you transfer $10,000 to a card with a 0% APR offer but has a 3% balance transfer fee, youll add another $300 onto your debt. If possible, choose a card without any balance transfer fees.
That said, even if you must pay a balance transfer fee, it could still help you save money overall depending on how much debt you have, what your cards interest rate is and how long you need to pay off your debt. It always makes sense to do the math for your personal situation before making a decision.
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At A Certain Point Your Remaining Balance Becomes Your Minimum Payment
In cases where your balance is lower than the credit card company minimum payment limit, your remaining balance will be the minimum.
For example: If your monthly minimum payment limit is $35 and your current balance is $25 balance, then your minimum for the month would be your remaining balance of $25.
Tip: Pay attention to minimum payment warnings!
Your monthly statements will also include a minimum payment warning box. This box tells you how long it would take to pay off a cards balance if you only make minimum payments. It will also tell you how much you need to pay per month to clear your balance in 36 months.
It May Not Solve Your Problem
Its important to do the math before initiating a cash advance to pay off another credit card. At 24% interest, taking a cash advance against your line of credit is one of the most expensive forms of debt available. It shouldnt be used casually, and theres more likelihood of ending up in even more financial trouble compared to pursuing a balance transfer. As an alternative, you may wish to consider a debt relief company.
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Why Nearly Every Purchase Should Be On A Credit Card
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Cash used to be king. People paid for everyday purchases with cash or with checks , and they saved credit cards for big, infrequent purchases If they had credit cards at all. Nowadays, credit cards are accepted almost everywhere, and some people never carry cash at all.
In general, NerdWallet recommends whenever possible:
Using credit cards . Spend money as you normally would, pay your balance in full every month, and you’ll reap all the benefits of credit cards while never carrying debt or paying a penny in interest.
If you lose your wallet or get robbed, any cash you were carrying is almost certainly gone forever. If thieves go on a spending spree with your credit cards, however, you generally won’t be held responsible for fraudulent purchases. It may take some time to sort out the resulting mess, but you won’t lose any of your money.
Other cards pay higher rewards in specific spending categories, such as groceries, gas or restaurants. Combine a handful of cards, and you can amplify your rewards considerably.
To view rates and fees of the , see .
What If I Cant Make My Credit Card Payments
Did you know that only 25% of Canadians pay off their credit card debt in full each month?
That means 75% of us carry a balance on our credit cards each month. In fact, its quite common for Canadians to carry outstanding balances each month on several credit cards, which can result in paying several thousand dollars each year in interest. Many Canadians eventually need credit card debt help.
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Things You Didnt Know You Could Pay For With A Credit Card
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Editors note: This post has been updated with new information.
If youre reading this, chances are youre already doing all the right things when it comes to maximizing your living expenses. This likely includes using the right or shopping for groceries. Perhaps youve even set up autopay for utility bills and insurance premiums.
But, there are lots of big purchases that you may be overlooking completely. Here are some common expenses you may not have realized you can pay for with a credit card.
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What Should I Do If I Cant Pay My Credit Card Bills
If you can’t pay your credit card bill, its important that you act right away. Contact your credit card company immediately because many creditors may be willing to work with you to change your payment if youre facing a financial emergency.
Heres what to do:
What To Do If Your Credit Card Debt Is Getting Out Of Hand
First and foremost, the best thing you can do to prevent your credit card debt from ruining your financial livelihood is to be proactive and tackle the debt to the best of your abilities. Even though your bank account might be drained for a while, its nothing compared to how much you might end up paying if you default on your payments for too long. If you cant afford to pay your credit card bills in full, sticking to the minimum payments is a temporary solution, but not one that you should keep up for the rest of your life.
So, if your rising debt level is getting so high that you cannot manage it, you can also consider the following options:
- Seek the help of a professional credit counsellor for more information.
- File for a consumer proposal.
- File for personal bankruptcy .
Filing for bankruptcy should only be considered as a last resort, but if your debt situation is so bad that its going to ruin your finances, it might be time to start thinking about it. Remember, while the consequences that follow unpaid credit card debt might take years to reach fruition, in the end, they could end up costing you your financial health. You dont want to be living in a constant state of crushing debt for the rest of your life. You might not even be the only one that suffers for it. So, think of yourself and your family and make sure that youre prudent with your credit card bills.
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What To Do If You Cant Get Out Of A Minimum Payment Trap
If you are finding it more and more difficult to get out of debt, it may be time you consider . Finding a credit counselor who works for a nonprofit organization would be best. Why? Because they will not drive you to one solution. Nonprofit credit counseling services focus on giving consumers impartial views of their finances to help them find the best debt relief solutions.
Connect with a certified credit counselor to pay off your debt.
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How To Resolve Payment Issues
If your credit card is declined, verify that youve entered each piece of information accurately: your name, billing address, and credit card details. Even one transposed number can cause an error with the transaction.
You may have to use another credit card if the card continues to be declined even after you’ve verified all the information is correct.
Balance Transfers Are A Good First Step To Paying Off High Credit Card Balances
Eric is currently a duly licensed Independent Insurance Broker licensed in Life, Health, Property, and Casualty insurance. He has worked more than 13 years in both public and private accounting jobs and more than four years licensed as an insurance producer. His background in tax accounting has served as a solid base supporting his current book of business.
Racking up credit card debt is a slippery slope. While there are a lot of conventional solutions to handling large amounts of debt, its important not to rule out other methods. Oftentimes, by exploring new options, you can find a better solution to your credit card debt dilemma.
- Balance transfers, which can be used to move debt from one card to another with a lower interest rate, can be a good option for individuals with high credit card debt.
- Cash advances are another option where consumers can take out cash against another line of credit and use that money to pay off an existing credit card.
- Neither of these strategies is a substitute for healthy financial planning and management, and they may not address overall problems with credit card debt.