If you can’t pay the balance in full, you should at least resolve to pay more than the minimum while you work off the debt. Paying twice the minimum is a good initial goal to start with. By increasing your payments you will work off the balance faster and reduce the total amount of money that you will pay out over the long term. What’s more, credit card companies can raise their minimum payment requirements. If you are just managing the minimum payment now, you could be in deep trouble if the minimum goes up. So, it’s a good idea to get used to paying more.
Most important of all is to focus on long term goals and keep your credit card expenditures low and within your budget. If your goal is to save or invest 10 percent of your income each month, and you spend too much on credit cards, you will use part of that 10 percent to pay your credit card bill. Yes, you will avoid paying interest if you pay the card off entirely. That’s a great first step. However, if you have not actually budgeted the amount you spend on credit cards, you are robbing your future to indulge yourself now.
Drew Kessler is Vice President of Marketing & Communications with the National Foundation for Credit Counseling.
Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.