How to Stay On Top of Credit Card Payments

Staying on top of credit card payments is central to several factors of financial health, such as having a good credit score, avoiding unwanted debt and managing your money so that you can achieve your financial and life goals. But struggling to keep up with payments on time can be stressful—and for good reason—failing to do so can have serious consequences.

Taking advantage of these five simple, yet essential tips can let you breathe easier when it comes to managing payments and will help put you on the path to greater control of your money, so you can focus on the other important things in life.

1. Pay at Least the Monthly Minimum

If you don’t pay at least the monthly minimum on time, a few things happen. First, you’ll get hit with a late fee or about $30 to $40.

Second, late payments can affect your credit score, affecting your ability to get a loan, rent an apartment, or, even get hired for a job. It’s better to put your money where it counts—toward the purchases you made on the card, which saves money on mounting interest in the long run.

Keep in mind that when you only pay the minimum, you’ll continue paying interest on the unpaid balance, which can wreak havoc on your finances. For instance, if a credit card’s monthly interest rate is 1.75% and you pay the minimum and carry a balance of $5,000, you’ll be charged about $88 in interest the following month.

Paying the minimum is an option if you’re truly strapped for funds, but paying your whole balance—or as much as you can above the minimum payment—not only saves on interest, it also helps boost your credit by showing that you use your credit card responsibly. That’s reflected by a lower utilization rate—a measurement of how much credit you’re using compared with the amount of credit available to you.

2. Find Extra Money in Your Budget to Make Payments

Scrutinize your budget for expenses to reduce or cut so that making monthly credit card payments is easier. For example, look for larger expenses, such as car insurance premiums. Research other companies that offer a lower rate or combine your auto and homeowner's insurance with the same carrier to get a better deal.

Another area to target is cable television, streaming services and cell phone data plans, which can add up to more than you need and use. Shop around for providers that offer the best rates and see if bundling services under one carrier saves money. Cancel the services that aren’t worth the cost.

If you don’t already have a budget, be sure to make one so that you can prioritize paying off credit cards. A budget will make it clear how much you have to spend after you pay off your credit card charges for the month. It will also help keep you from charging things you can’t afford.

3. Get a Lower Interest Rate

If you can’t pay your balance in full each month, getting a lower interest rate will make paying off the debt easier. There are a couple of ways to do this.

Securing a lower annual percentage rate can be as simple as calling the credit card company and asking for one. If you have a good track record of paying on time, this will work in your favor, as will a good credit score, so find out what your credit score is before you pick up the phone. If you don’t have a good credit score, you can take some simple steps toward improving it.

Another strategy is to transfer the balance to another card with a lower interest rate or even one that has a 0% introductory APR. You will need to have a qualifying credit score, to get a new lower or 0% rate, which will last for an introductory period of six months to a year.

Be sure to have a plan to pay the balance before the introductory rate expires and check if there is a fee to make the balance transfer. Consider whether a balance transfer fee of 3% to 5% would be less than the amount of interest you’d pay during that period on the original card.

4. Combine Multiple Balances into One Easy, Less Costly Option

If you carry balances on multiple credit cards, combining them into one monthly payment is easier and can save money. Find a lower APR than the rates on your credit cards, and you’ll pay less in interest and you’ll pay off debt faster. You can find out how much you can save by using the Fifth Third Bank credit card consolidation calculator.

5. Tap Tech Tools to Make It Easy

Setting up automatic bill paying and using budgeting apps can help make life easier and reduce stress around paying bills. Some popular budgeting apps are effective at keeping you motivated and focused on your goals.

For instance, You Need A Budget’s app is aimed at teaching you how to manage your money and get ahead. Features are designed to make it simple to share finances with a partner, track goals, and be inspired by free, live, online workshops offered weekly. The app has a monthly fee but offers a free trial.

Another app, Mint, is free and helps monitor all your bills, receive alerts when bills are due and warns you when funds are low.

Other tech options include setting up calendar reminders or making automatic payments by linking your checking and credit card accounts so payments are never late.

Leveraging these tips can help you use credit cards to your advantage—not luring you into impulsive spending and unwanted debt. Adopt a healthy credit card mindset by thinking of charges as a loan to yourself that you pay off monthly. Paying back the amount as quickly as possible will limit or eliminate interest charges—so you can spend your money on things in life you enjoy instead.