Paying Off Your Credit Cards Faster

Some of us just can't cut up our credit cards because we are unable to pay off our credit card debts.

Let me share with you a strategy I learned somewhere sometime back. Let's say I owe Bank A Rm10,000 and Bank B Rm2,000. If I pay the minimum payment of 5% I would be paying Bank A Rm500 and Bank B Rm100.

If I had Rm1,000 to pay these two credit cards. Most people would either pay Bank A Rm900 and Bank B Rm100; or even bank A Rm700 and Bank B Rm300. These are not the wisest moves.

The better strategy would be to pay Bank A Rm500 and Bank B Rm500. Generally all banks charge 1.5% per month on your credit card balances. So, the interest you would save is same whether you pay Bank A or Bank B, but in the long run, it would be better to pay Bank B. Why? You would get out of debt faster because after you have settled your debts with Bank B, you could apply from Bank B to do a Balance Transfer to Bank A.

In a Balance Transfer, Bank B takes over your debts to Bank A. For business considerations, Bank B will charge you monthly rates as low as 0.5% over a period of six (6), which is way below the normal rates of 1.5%. Imagine how much you would save in interests.

And if you can discipline yourself, you can "swing" between Bank A and Bank B once every six (6) months. Imagine how much in credit interests you would save! This is easier said than done. You need to be disciplined and you have to time it and refine the "technique". However, I assure you that it is worth your while!