The only way to service debt today is to make regular payments as and when they fall due.

If you are in a financial position to pay more than the minimum payment each month then the more you can pay off your credit card or debt balance will make servicing debt obligations that much easier and will save you money.

You will save money and service all your debt obligations and responsibilities sooner if you can lessen the interest on outstanding balances. The longer you leave the principal amount borrowed the more interest it will accrue.

Accrue is a financial accounting term meaning “to gather from a natural thing” such as when money grows naturally from an interest rate being applied.  When you accept a credit loan, for every dollar that you borrow you will be charged a rate of interest.  These interest rates will vary considerably from lender to lender so whichever loan you accept you will also be accepting their interest rate charges and this means that the money that you borrow will grow naturally from this interest rate being applied to the principal amount borrowed.

When you accept a loan or a credit card from a financial institution you are also accepting their rate of interest on the money that you borrow and their terms and conditions for the repayment terms.

So when they are charging you a minimum repayment amount each month it is not actually paying off the principal amount borrowed. You are really only paying the interest on the money that you borrow so over time, for every minimum payment that you don’t pay in full, this rate of interest is getting added to the principal amount so that you are ending up paying interest on the interest of the principal. It is insidious.

To service debt and use the credit facility available and to your advantage, you really need to be very self-disciplined and pay off the debt as soon as possible.

The less interest you pay on the money you borrow means that you are getting the use of the financial institutions money much more cheaply.

Not only that, it makes servicing the debt and all your financial responsibilities that much easier. The sooner you can pay off all your credit debt will not only save you money but will allow you to score a higher credit rating which will mean long-term that you will have more borrowing capacity for the big things in life like getting a good mortgage rate of interest when you want to buy a house.

The bottom line really is that if you can’t afford to service debt then don’t borrow any money.