Oh, that little piece of plastic — the credit card. It’s shiny, often colorful, and just so easy to swipe at the register. But sometimes, that handy piece of plastic can get us into financial trouble. Since we are not physically handling money, it can be easy to disassociate our purchases from money that we have available (or maybe don’t have available) in the bank. Credit cards can be a convenient way to pay, but not always easy to pay off. Here are six ways that you can use the money you have to smartly pay off credit card debt.
1. Make more than the minimum payment
Credit card companies make money from consumer debt by charging their customers interest on purchases made on credit cards. If you carry a balance on your card, chances are you are paying interest. A small purchase can become a large debt if it remains on your credit card. Making minimum payments will pay off your credit card, but you will pay a lot in interest and it will take a long time to get that balance to zero. Paying even an extra $50 per month can cut down on interest payments, lowering the long-term cost of your purchases.
2. Use rewards points to pay down balances
Many credit cards come with cash back options or points benefits. These can be used for gift cards, airline credits, or credit towards your account balance. This is essentially free money that can be used to pay down your credit card debt. The company hopes that by enticing you with benefits, you will spend more. As long as you stay disciplined and stick to your budget, you can use those benefits towards your balance without adding to it.
3. Set up an automatic allotment
Work with your bank or employer to set up an allotment that will automatically go towards paying off an account of your choice. Funds will be sent directly to your credit card company when you are paid, without you having to make the transfer. This can make it easier to keep up with those additional payments. Just make sure that you account for your slightly lower take-home pay in your budget so that you don’t start racking up even more debt.
4. Cut down on discretionary spending
Are you a latte-a-day kind of person? Are you more likely to go out to lunch with coworkers than spend the time to pack a brown bag? Those small purchases can add up, leading to even greater credit card debt. Chances are there are places where you can cut back on spending in your daily life. If paying down credit card debt is a priority, consider changing some of your other habits. Fill a to-go mug with coffee before heading to work or pack a lunch rather than spend your hard-earned money on lunch out. Put the money you would have spent at the coffee shop or deli towards making extra payments. Not only are you paying off your credit card, you are creating new habits that will help keep your spending in check in the future.
5. Bring in extra cash
If you have extra time or skills that you can use to bring in more money, a side hustle might be right for you. Check for online positions that you will be able to work at in the evenings. Consider working in a short-term position, such as during the holiday rush, to bring in an extra paycheck that will go directly to your debt. You may even find people in your own neighborhood looking for some help with home maintenance, childcare, or other tasks that you feel capable taking on. Take any money that you make and put it directly towards your credit card balance.
6. Sell your stuff
Finally, you can always go with the good old fashioned garage sale. With the addition of online sites and social media marketplaces, it is easier than ever to make some additional cash selling your unused items. Take a look around your house and see what you aren’t using. Take a few photos, write up a description, and you can soon be bringing in some extra money to put towards your credit card balance. You probably won’t make a ton of money but every little bit can help pay off debt. You also have the added bonus of less clutter, fewer things to upkeep, and lower maintenance costs.
Credit cards are handy little pieces of plastic, enabling users to make purchases without carrying and keeping track of tons of cash. If you have found yourself with a balance on that credit card, don’t worry. Take action by saving extra money or benefits to make extra payments. That balance will be at zero before you know it. And that is an oh-so-wonderful feeling.