Credit cards are flexible loans and are very convenient, but only if you use them wisely. You may be tempted to use them more than you need to and they can turn out to be a very expensive way of borrowing.  You can borrow up to your credit limit each month. You keep this maximum credit limit as long as you pay the minimum amount due. If you repay the full amount you owe each month you pay NO interest.

Because you pay only the minimum due, your debt is mounting up quickly due to the very high interest rate. Rates of interest on credit cards can be up to twice what they are for overdrafts or other loans. Paying off anything less than 100% of the outstanding balance means you can be charged interest on the entire balance for the month.

For that reason it makes sense to begin reducing the balance on your credit card until you get to a point where you are able to pay off the full balance at the end of each month.

I cannot afford to pay off the entire balance on my credit card – what should I do?

Look at what you are currently spending on your credit card and see if you can reduce it.

Some people switch their outstanding balance to a new credit card to avail of the special offers available to new members. Many credit card companies offer 0% interest on your debt for six months.

This may work if you are sufficiently disciplined and can afford to pay off all the outstanding debt within the six month period.

Alternatively, try to pay off at least what you are spending. If you can afford it, try to pay a little bit more so that you can eliminate all outstanding debt. If you cannot afford to clear the debt within a year you should consider arranging a Credit Union or bank loan to clear the debt thereby reducing the penal monthly interest charges on your credit card.