Passive Income

Do you hate seeing the amount of interest you pay the credit card companies each week? Do wish there was an easier way to lower credit card debt without getting a second, or even a third, job? When I began my quest to become debt free, I started sending multiple payments to my creditors each month.

Credit card companies like to charge you on your average daily balance.  If you send in payments more often, you can effectively reduce the interest that accrues on your daily balance. Additionally, if you will commit to making payments every 14 days, you will end up making an additional payment every year. This will truly help you lower credit card debt.

Before you start sending your credit card companies extra checks, ensure that they allow you to remit amounts that are less than the minimum amount due. Not all credit card companies will honor multiple monthly payments that are smaller than the stated minimums.  If you are going to commit to such an effort, you will want to be sure it is worth it.

Once you have established that making multiple payments is allowable, decide  how you are going to actually make the payments. My preferred method is to use online banking. I have used it for well over two years now, with absolutely no issues. You are, in fact, safer making payments online than you are when you send in a check. Additionally, when you pay online, your payment is already coded to your account. You do not have to worry about the credit card company incorrectly applying your payment to someone else.

Next you need to decide how much you are going to send every 14 days. Since my goal is to lower credit card debt, I actually send in the minimum amount every 14 days. If your income does not allow this, send in half of your minimum every 14 days. This is another benefit of using online banking (your payment will get there faster). In order for this method to work, you must be organized. Otherwise, you can get into trouble.

Since you will be making less than the minimum amount due every 14 days, it is imperative that you do not fall behind in any payments. Even though you are making more than one payment, you are still required to make at least the minimum payment. You can, and will be, assessed late fees and penalties if the second payment arrives late. Again, I cannot stress how much having an online account will help you in this regard. I enter my payments to automatically be made on a certain day. This way if I forget, my payment will still be sent off as planned.

What do you think? Has anyone tried this method to lower credit card debt?

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