Paying Credit Card Bills on Time

If you can pay your credit card bills on time every month you will quickly get a good credit report and save yourself a lot of money.

While many of us struggle to make the bare minimum payment each month, as the month’s progress and all we manage to do is pay the bare minimum, then we are increasing our interest rate bill exponentially.

When you pay only the bare minimum each month you are really only paying interest rate and not taking or taking a very small amount, off the principal amount of the loan. If you go on indefinitely paying only the minimum, you won’t be paying anything off the original amount that you borrowed.

All credit card debt is money borrowed. Any money that you borrow has to be repaid to the lender. It doesn’t matter if the lender is a credit card company, a bank or other financial institution or your great-Grandmother; if you borrow money it has to be repaid with or without interest.

This is why when you accept a loan from a financial institution you have to sign a contract (application form) for the loan where it says very clearly the interest rate at which you have agreed to borrow the money and to repay. A credit card application is the basis of your contract with the supplier of the money that you have applied to borrow.

Contractual law can get very involved and messy so be very aware of what you are signing for and make sure you always keep all the paperwork associated with any monies that you borrow from anyone, anywhere, any time.

Here are three ways to use any credit card to lower your credit debt:

1. Don’t use a credit card at all. Yes, you have to have one and some credit card companies ‘make’ you use it to keep a good credit score. Abide by their terms and conditions and you will stay financially healthy. But only use as much credit on your credit card as you can comfortably afford to repay.

This clause on a credit card contract should be made illegal in my opinion. But until our authorities are prepared to make some hard rules for our financial institutions and put some regulations in place for the people, this is a clause in some credit card contracts and if you sign up for one of these cards then you have to abide by the Terms and conditions associated with the contract.

2. If you have used your credit card then pay off the full amount borrowed each month. Always pay more than the minimum amount requested because this pays off the interest rate plus part or all of the principal.

Don’t put more debt on your credit card each month than what you can afford to pay off in full each month.

3. It is advisable to keep one credit card in your name. If you don’t absolutely have to have a credit card, then cancel the account with the Credit Card Company or financial institution and use the scissors to cut it into pieces so you will never be tempted to use it again.

Before doing this, make sure:

A) You have cancelled the credit card with the company and there is absolutely nothing owing on it now or in any future charges and

B) That the credit card that you keep is the one with the lowest interest rate charges.

In today’s world, everyone needs a “piece of plastic” credit card. But there are credit cards and there are credit cards but whenever you use either of them to pay for something, the debt can be very different.

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