A credit card is a useful and easy form of personal debt. Sometimes it’s a bit too easy, with Canstar Blue’s survey of more than 1,600 New Zealanders with a credit card finding that only 58% of survey respondents pay their card in full each month. That means that many of the others are accruing interest – particularly the 9% of respondents who admitted to only paying the minimum on their card each month! With CANSTAR research finding that credit card interest rates range from around 12.69% up to a whopping 25.45%, credit card interest can be an expensive price to pay for a bit of impulse shopping.
If you are one of the many who pay interest on your credit card, here are some tips to help reduce that cost.
Pay a bit more
It’s easier said than done but do through your budget with a fine tooth comb and see if you can’t find some savings. Whatever saving you find, use them to pay down your credit balance.
Look for a lower rate card
As mentioned, the interest rates currently applied to credit cards on CANSTAR’s database range from 12.69% up to more than 25%. Half the recent Canstar Blue survey respondents said that they hold a credit card with their main financial institution – chances are that many of them didn’t shop around! So unless you are on a super-low rate already, you could probably save money by changing your card. Of course make sure you carefully check all the terms and conditions, to avoid any nasty surprises from your new bank in the future.
Reduce your credit limit
Once you have paid down some of the debt on your card, why not reduce your credit limit – or otherwise remove it from your wallet to remove that day to day temptation.
Examine your spending
An impressive 79% of Canstar Blue survey respondents feel that they are good at managing thier own finances – but there’s always room for a little bit of improvement! So dissect your monthly spending, and look for areas where you can cut back. Perhaps do a written budget. Then apply the newly freed up money to reducing your credit card balance.
It can take a while to get your credit card balances back to zero – after all, the debt often takes a while to build up in the first place. The earlier you make a start though, the sooner it will get done.