Paying off credit cards takes a little discipline. But with a basic, step-by-step approach, you can easily keep your cards on track.
If you only have one credit card, we can keep it real simple: check your monthly statement, mark the due date on a calendar and make sure you mail or transfer your payments before they’re due.
Always try to pay the full balance, and if you can’t, try to pay more than the minimum due. The more you leave unpaid, the more interest you’ll pay.
Ideally, if you’re really on top of things, make a few online payments throughout each month, instead of one payment just before the due date. Credit bureaus will take notice and could boost your credit score.
If you have more than one credit card, we can still keep it simple. Let’s take them all together, get a view of the big picture, then address them one by one, step by step.
The first step is getting organized. Get your statements and due dates in order to start, and you’ll find the payments that follow easier to manage.
Now take a minute to review your list.
Which card do you use the most? How does the APR compare to your other cards? Are you getting the best perks and rewards with that card?
Here’s the most important question: on which card do you pay the highest interest charges?
That can be different from the card with the highest APR. For example, a card with a high APR but a low balance might not result in high interest charges. You might be paying more interest charges on a card with a low APR but a high balance.
Here’s the second most important question: is there a card with a low balance you can pay off in full fast?
When you can’t pay the full balance on every card every month, prioritize the card that charges you most interest or target a card you can pay off in full quickly. Whichever card you’re targeting, avoid using it more until the card is paid off.
Paying the full balance on every card every month is always the best strategy. You’ll avoid paying interest charges, you’ll have more credit available, and your credit score will probably stay healthy.
If you’re juggling multiple cards, consider these popular strategies.
With the Debt Snowball method, you’ll make minimum payments on all of your cards each month, but you’ll also make larger payments on the card with the smallest balance -- the card you can pay off fastest. There’s a good feeling that comes with targeting a card and clearing it quick.
When that card is paid off, move on to the next card with the lowest balance. As always, pay the minimum due on all your other cards, but when you pay more on the new lowest balance, try also adding the minimum payment you would’ve made on the card you just paid off.
Repeat again and again, always targeting the card with the new lowest balance. When you add the minimum payments you’re no longer paying on other cards, you build real momentum, like a snowball down a hill.
There’s a good feeling that comes with clearing a card fast. That builds momentum too.
Just as important: it’s a regular strategy you can follow month by month, organizing your efforts and focusing how you pay off your card debts.
The debt avalanche method is another popular strategy. Instead of focusing on cards with the lowest balance, you’ll target the cards with the highest interest charges. As we’ve noted, that’s not necessarily the card with the highest APR. Check your statements. You might be paying more interest on a card with a low APR but a high balance.
Like the Snowball method, you’ll pay the minimum due on all your cards but pay more on the card with the highest interest charge.
Your target card might change month to month. You’ll need to review your statements and the interest charges as you go. You also might not fully clear a card fast. But you’ll pay less in interest charges, saving you money while you pay off your cards.
With both the avalanche and snowball methods, avoid using the card you’re targeting with larger payments.
Bright uses its own patented system of 34 algorithms to learn about your finances and make smart payments for you, always on time and always optimized for savings. Bright also keeps it simple for everybody to use.
If you haven’t done it yet, download the Bright app from the App Store or Google Play. Connect your checking account and your cards in just a few clicks. Then set your own pace, and let Bright get to work, making your card payments for you month after month.