Almost half of Americans with credit cards don't pay off their balance in full each month. And over the past five years, carrying a balance has gotten significantly more expensive. Here are five easy things you can do to cut your interest costs and get out of debt faster.
Pay off highest-rate cards first
To save the most money and eliminate your debt in the shortest amount of time, pay off your cards in order of annual percentage rate. Make the minimum payment on each card, then put all your leftover money toward the card with the highest rate.
Double your minimum payment
One simple way to make a huge impact is to pay double the minimum. Say you owe $2,000 on a credit card with a 20% APR and a $40 monthly minimum payment. If you could find an extra $40 in your budget and you paid $80 each month, you would save $1,727 in interest and get out of debt more than six years faster.
Apply any extra money to your payment
It pays to put any money saved on credit card interest toward reducing your card debt. Say you owe $5,000 on a credit card with an 18% APR and a minimum payment of $100. It would cost you $4,311 in interest if you just paid the minimum. But what if you cut your monthly expenses by $25 and made a $125 payment each month instead? You would save $1,618 in interest charges and almost three years of payments.
Split your payment in half and pay twice
