Should I Pay Off My Credit Card Now?

If you have credit card debt, then you may wonder whether you should pay it off or not. You will be aware of the fact that you are paying interest each month but may not really have worked out how much or thought about the consequences of not paying it off. However, you may feel that you do not have the money to pay it off or that it is nice to have the money that you would have used to pay it off to spend on other things. It is good to think through the advantages to decide whether you should consider paying off your card.

Cost

It is really wise to think about the cost of your credit card. You may just let the minimum payment g out of your bank without really taking any notice of how much you are paying. It is worth looking at the credit card statement and seeing what you are actually paying in interest each month. Then multiply that by twelve to see how much you would pay in a year if you continued to just pay back the interest. You will then get a better idea of how much the card really is costing you. It is good to note that every time you only pay back the interest without paying back any of the extra money that you owe, you will have another month to come of paying that interest. That interest is money going to your lender which you could avoid paying if you paid off the card. You are paying to stay in debt. It is worth thinking about whether you really is worth paying this much each month just for the privilege of having that debt and owing that money.

Credit record

If you owe a lot of money and have done for a long time, then this may not be looked on favourably by others. It will show up on your credit record and so if you want to borrow more money or even rent a new home, it could have an influence. A potential landlord or lender will see that you have had this debt for a long time and may see it as a sign that you will not be able to make the regular payments to cover rent or a debt repayment. This can be really tricky if you are trying to find somewhere to live and are having trouble with renting and borrowing for a mortgage because of your credit record.

Future spending

It is also worth thinking about your future. Will it be practical to have a credit card debt hanging over you into the future? As well as affecting your credit record, it could mean that you will have less money available to buy things, because you always have this interest to pay on this credit card. It could make sense to start paying back a bit extra each month so that you will eventually clear the whole balance. The minimum payment may cover the interest and a little of the outstanding balance, but if you can pay a bit more, then you will get closer to paying off the debt. Even if you just pay a little bit extra each time, it will start to reduce the debt. This will mean that not only will you eventually clear the debt, but you will also have available credit on your card, should you need money in an emergency and need to spend it.

Extra Money Concerns

It will be natural for you to worry that if you are paying extra money off your credit card that you might be short for money elsewhere. However, it is worth remembering that you can always use the credit card if you are short of money as you will have some funds available. You should also take some time to work out how you will manage to pay off a bit extra each month. Take a look at your spending and see whether it is possible for you to cut back in any areas. Compare prices on everything that you buy and you might be able to reduce what you are spending and get some extra money this way. You may be able to sell things so that you can get lump sums of money to pay off chunks of the debt. It may be possible to work more hours to get extra money to help out. There are many possibilities that you can explore.