Spend Less on Credit Card Debt

 When you’re looking to live on a budget, there are two options that you have to reduce your spending. The first is to look for cuts to your day to day living (this is the usual advice of “don’t buy that cup of coffee so you can pay your bills”) or to reduce longer term spending. For many people with a tight budget in place, credit card debt forms a good size percentage of their monthly spending, and many credit card terms of usage are structured to keep people in this cycle for longer than necessary. However, with a few simple tips, you can really make a big step towards becoming debt free on your credit cards which will put some much needed spending money back in your pocket

Playing the credit card juggle

The big mistake that many people make is how they think about credit cards as a tool for financial gain. They often get lumped in with bank accounts, where most people open one in their twenties and then stick with that bank for decades regardless of other special offers or the interest rate they earn. If you apply the same logic to credit cards, you get stuck with ridiculously high interest rates making it hard to pay anything more than the interest each month. However, by changing credit cards frequently, you can reduce your debt quickly. Here’s three easy way to play the credit card juggle:

• Go 0% on transfers - the best place to start is to find whatever bank is offering a 0% on balance transfers that matches your credit score. While you’ll often pay a small percentage fee on the total balance, you’ll end up saving more in the long run due to the 0% interest rate on your new balance.

• Diarize the end of introductory offers - given your credit score, you’ll find cards that have 0% on balance transfer offers ranging from 6 months to 18 months. It will be important to diarize when the 0% rate ends as you’ll find yourself stuck with 15% or even 20% as your base rate after that time. However, the solution is easy. You just need to find and open a new 0% credit card and transfer your remaining balance across. Keep the old card open to boost your credit score (banks like long credit patterns) and keep your eye out for new offers on your old cards.

• Make more than the monthly payment - to make this work, you will need to make more than the monthly payments so that your balance reduces by more than the balance transfer fee for each card. Using any money that you’re putting towards savings is a good way to achieve this - while this doesn’t feel right, you will save more money in the long run by paying off your debt than saving money in low interest accounts.

This trick still applies if you have poor credit. You may have to accept a card that has a higher balance transfer introductory rate, but as you make payments on time and reduce your debt, your credit score will increase so you’re more likely to get a 0% card on your next try.

This was a guest submission from Simbi. 

One example card to try is the quicksilver card, which does have a 0% APR period, sign up with this link to help support the blog and to get $200 cash back when you spend $500 in the first 3 months.