You’ve heard a lot about how essential it is to pay your bills on time and make at least the minimum payment – but here’s one more important piece of advice: Pay more whenever you can.
It will save you money in the long run and will help you get out of debt faster. That’s because the sooner you pay off any bill where interest is charged – whether it’s your credit card, car loan, or mortgage – the less you will pay in interest costs.
In fact, paying off your bills faster can save you thousands of dollars.
For example, a $100 minimum payment on a $5,000 credit card bill at 18% interest would take 93 months to pay off and cost you $4,311 in interest charges. If you paid $200 a month instead, you’d have that bill wiped out in 32 months and pay only $1,314 in interest. That’s a savings of nearly $3,000!
So, always be responsible about making your payments on time and think about how much you’re saving by paying more whenever you can. You can even use great tools like online banking to set how much you want to pay each month so you can automatically start paying down your debts!