"I’m saving instead of paying off my credit cards"
You may believe that if you are saving for an expensive purchase or event, such as a holiday, wedding, or just a rainy day, there is little point in over-repaying credit card debts at the same time. This could not be further from the truth; racking up interest charges on a credit card will negate the interest earned on any savings, and cause avoidable expense. A clever shuffling around of your finances can help you to stay in control and keep your money working for you, rather than paying unnecessary credit card interest charges. In fact, there is little – if any – excuse for paying interest on your credit card debts ever again if you learn how to take advantage of different deals offered by credit card providers over the long-term.
Use your savings to repay your credit card debts
Having your savings sitting around in a bank account while you pay interest on your credit card debts makes zero sense. You would be much better off by dipping into your savings to clear your credit card debts, and repaying the money back into your account later on. This way you’ll avoid interest charges all together and can begin saving again with a clean slate.
Use a balance transfer credit card
If you don’t have enough in your savings to cover the amount of credit card debt you owe, take advantage of an interest free balance transfer credit card for the remaining amount. Many credit card providers offer these deals as a way to attract new business, and they are an excellent way of avoiding paying interest on your debts. Find a card that offers a lengthy interest free period for the lowest handling fee, and transfer your existing debts onto the new card. During the interest free period no interest will be charged on your balance, leaving you free to repay the debt gradually without penalty. This option also works if you really don’t want to dip into your savings, as you will still be avoiding paying interest, but it will probably take you longer to repay the credit card debt if you cannot throw all your spare cash at it. Find an interest free balance transfer credit card.
Purchase on an interest free credit card
If repaying your credit card debts has depleted savings that were intended for a particular purchase, a carefully selected credit card will once again help here. Many credit card providers offer an interest free period on new purchases as an introductory offer; taking advantage of this will mean that you can make the purchase using your new credit card and repay the debt over time without being charged interest. You may also earn rewards such as free flights, cashback or loyalty points in this way. Go for a card that offers a lengthy interest free period and if you are unable to repay the debt in full by the end of the introductory offer, go for an interest free balance transfer to avoid paying unnecessary interest. Find a credit card that offers interest free new purchases.
Keep it up
Keep these habits up long term and you can avoid paying interest on your credit card debts unnecessarily. It may take a bit of forward planning and dedication, but anything that keeps your hard earned money in your pocket rather than in your bank’s coffers is definitely worth it.
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