You can use the following lump sum funds to pay down credit card debt: Once you are focused on becoming debt-free, it won’t be difficult to stop yourself from spending it. Whether you use work bonuses or cash gifts from your loved ones, it can help you make extra payments. Resist the temptation to splurge and use this windfall to pay down your existing balance. Pay Down Balances with a WindfallĪpart from saving, make use of any large funds you get throughout the year. While tightening your belt, just imagine how great being debt-free will be. This increases your finance charge, which is the cost of holdingĬontrol your spending so the extra money can pay your credit card debt. Next, if you exceed the due date by 60 days, brace yourself for a higher Penalty will reflect on your next billing statement, which can go as high as $39. It spells bad news for your credit report and may eventually lead to toxic debt.įirst, creditors charge for late or missed fees. There are dire consequences when you repeatedly miss payments. If you pay it within 10 months instead of 20 months, you save $176. You spend almost twice as much interest if you only pay the minimum. However, you can clear your balance in 10 months if you pay $100 more each month. Pay it with minimum payments versus adding $100 more each month.Įxplanation: Minimum payments will take you 20 months to pay the balance. The table below shows how long it would take to Minimum monthly payments, it will take longer to clear your balance.įor example purposes, let’s say your balance is $2,000 and Goes to your principal, which is the actual debt you owe. Doing so can decrease your debt-to-income ratio (DTI) and help improve your credit score.Įxceeding the minimum payment ensures more of your money

Reduce your credit card balance by paying more than the minimum fee.

You need a budget credit card payment