If you could pluck a $5 bill out of the air each month and apply it to your credit card debt, would you do it? It doesn’t sound like much, but it does add up over time. And anyway, $5 is $5 – I’m sure you’d bend over and pick it up if you saw it laying on a deserted sidewalk.
If you’re making payments on credit card debt, you can pick up that $5, or possibly more, by making one simple change in the way you pay your bills.
Some look at a credit card bill, check the due date, and plan to pay it on that date. Some even go on line and schedule the payment for that date. The thinking is “Why should I give them my money ahead of time?”
Savings is the reason why.
If instead of waiting for the due date, you check your accounts on line and make the payment the day the statement is issued, you’ll save money.
The day your statement is issued, the interest for the previous month is added. From that point you pay daily interest on your previous balance, plus last month’s interest.
Say you have a $10,000 balance at 18% interest. When the statement comes out the new balance will be $10,150. Now you begin paying daily interest on that new balance. Your interest, per day, will be $5.075.
If instead, you make your minimum payment of $350 on the day the statement comes out, you’ll bring your balance down to $9,800. That will cost you $4.90 per day.
Over the course of a month, that 17.5 cents per day adds up to $5.25. This is extra money you’ve paid against your debt without taking anything extra from your bank account.
If you’re paying a higher interest rate, or paying on a higher balance the savings are even greater.
Making additional payments during the month, even if they’re small, can also help you pay off that credit card debt faster. So if you happen to work an hour overtime or you find some great coupons and save on your regular grocery purchases, plunk that extra money down on your credit card debt the day it goes into your bank account. Most card issuers will accept on line payments in any amount during the month, and most will let you make a payment once per day.
Author: Mike Clover
CreditScoreQuick.com
