How to benefit from the new credit card statement
Your credit card statement can be a valuable tool to help you keep track of your spending, manage your account - and protect your credit score. Take some time every month to review your redesigned statement.
- The account summary lists your balance by each transaction category, the fees and interest charged, your total credit line and your remaining available credit.
- The payment information chart outlines how long it will take to pay off your current balance and the total amount you will pay if you make only the total minimum monthly payment.
- The interest charged calculation section lists the APRs for all transaction categories, including Purchases, Balance Transfers, Direct Deposit and Check Cash Advances, Bank Cash Advances.
Knowing this information may fire up your determination to tackle your debt. If so, here are strategies for how to pay off credit card debt faster.
1. Choose the debt you’ll pay off first. Always make at least your total minimum monthly payment on all your cards. Then, if you have more than one credit card, review your statements to find the range of interest rates you are being charged. You have two choices for paying more than the total minimum: either pay more to the creditor with the highest interest rate, or target the smallest debts first. Once one debt is paid off, take the money you were paying and put it towards the balance with the next highest interest rate.
2. Pay more than the total monthly minimum. The total minimum payment warning on the new credit card statement tells you how long it will take to pay off the debt if you only pay the total minimum, and how much you’ll be paying in interest. For each of your credit cards, any amount you pay over the total minimum will be put toward the balance with the highest interest rate, allowing you to pay your debt off faster and reduce the total amount of interest you pay.
3. Consider consolidating your debt. If high interest rates are preventing you from paying more than the total minimum, consider debt consolidation. A lower interest rate would let you pay down the balance faster without increasing your payments. Options include applying for a line of credit or transferring your balance to a low interest rate credit card. (Balance transfers typically have a 3-5% fee, so take that into account when evaluating whether it will save you money.)
4. Create a budget. Figure out where your money goes by recording your daily transactions, and then find ways to save. A budget will help you control your expenses for things like entertainment and clothing, and help you identify where you tend to overspend. Use the money you save to pay down your credit card debt faster.
In the long term, having less debt can help you to establish a good credit history and may improve your credit score. Let the information on the new credit card statement be your incentive to take control of your finances and pay off credit card debt faster.
What's next? A get out of debt checklist