How to pay off more than one credit card more quickly?

Posted by Peter Ritchie - intouch Finance Mornington • 5 March 2016 • Tags:

The ease of which we can obtain credit these days means that many consumers have multiple credit cards. 

I am not here to judge whether it is necessary to have more than one credit card but what I can offer some advice on is the difficulty in balancing multiple credit cards. 

Credit Cards image.pngHaving more than one credit card means you have to juggle and monitor interest-free periods, interest rates, payment dates and keeping the accounts in order. 

If you are finding it difficult to keep on top of your credit cards here are a few tips that might help. 

  •          Focus on paying off the credit card with the smallest balance first. 

If you just pay the interest on the bigger credit card balances and put the extra money of the smaller balance you pay it off more quickly 

You need a quick win and the achievement will help you feel better. 

  •          When the smaller card is paid off you can then focus on the next card. 

Use the extra cash available from paying off the smaller card to make principal reductions on the next card. 

If you have 2 credit cards with a similar balance then start paying off the credit card that has the highest interest rate. 

  •          Please know the interest rate on all your credit cards. 

It is important not to get caught up in thinking because home loan rates are relatively low that your credit card rate will be as well. 

Yes, home loan rates are low, but very few lenders have passed on any interest rate reduction on their credit card facilities and some are as high as 19%. 

  •          Look to consolidate your credit cards with a 0% interest rate card and then apply the same tactics are highlighted above. 

Here is a link to a fantastic tool to see how paying a little extra in to your credit card and not just the minimum, will reduce the debt faster – ASIC MoneySmart Credit Card Calculator 

Peter Ritchie is the Principal of intouch Finance Mornington