Credit Purchase
If you’re using a credit card to buy, you can avoid paying extra interest by following these tips:
Pay off the cards in the order of their interest rates
One of the biggest mistakes people make when paying off their credit cards is not prioritizing
payments. If you’re trying to pay off your debt, you must first pay off the
card with the lowest interest rate. It will allow the money that would have gone towards
high-interest debt (which could cost thousands in interest over time) to go towards other bills or
savings instead.
If a card has an annual percentage rate (APR) of 18%, for example, and another has an APR of
20%, it makes sense to focus on paying off that first one before moving on because it will save
you sleep easier at night knowing your money is safe
Initiate multiple payments every month
It’s a good idea to make more than required, but don’t worry about overspending. If
you’re not in debt, It will use the extra money to pay off your credit card balance faster.
To avoid paying unnecessary interest on your purchases, the best thing to do is make multiple
monthly payments. The easiest way is by setting up automatic payments from a checking or
savings account and having them withdrawn on the due date of each billing cycle so that there
are no surprises when it comes time for payment.
Buy low-interest rate cards for spending.
While credit cards can be a convenient and helpful tool, keeping your finances in
check is essential. If you’re struggling to pay off your balance every month, here are some steps that can
help:
● Avoid using credit cards for everyday purchases. Instead of paying with a card, use cash
or debit instead so you’ll be more aware of how much money you’re spending on each
thing.
● Buy low-interest rate cards for spending only. If you do have a splurge item or purchase
planned, consider getting an interest-free card for that purchase only — like the Amazon
Prime Rewards Visa Signature Card — and pay the entire balance off before any
interest starts building up on this card’s 19.99% purchase APR.
Don’t put medical expenses on the credit card.
Stop if you’re considering putting medical expenses on your credit card. That’s because medical
expenses are not tax-deductible, and they’re not covered by health insurance. To make matters
worse, they are also not covered by credit cards. So if you end up paying interest on your
balance (and most people do), the money will go towards interest instead of actual
medical bills.
Consolidate your debt by using a 0% balance transfer
card
According to professionals at SoFi, “a card with a 0% balance transfer or similar 0% credit card
offer could be an enticing option for those who want to make major headway in paying down a
credit card balance.”
If you have a high-interest credit card, consider transferring your balance to a card with a 0%
introductory APR. It will allow you to avoid paying interest on your current debt and make
extra payments toward it during the introductory period.
Here’s how to avoid paying interest on credit card using a card with an introductory 0% APR.
● Transfer your existing balance to a new card with an introductory 0% APR offer (for
example, 12 months).
● Make sure this new card has no annual or foreign transaction fees. If the new
card charges an annual fee, call them and ask if they’ll waive it for this first year—they
may give it to you even if they usually don’t waive annual fees!
● Pay off as much of the transferred debt as possible before the 0% rate ends by making
additional monthly payments on top of what’s required each month (this is called " paying
ahead").
Credit cards can be an excellent way to manage your finances, but they also come with many
potential pitfalls. So talk to an expert at reputed platforms like SoFi before getting one.
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