Limiting your credit card balances – How to pay off your credit cards when paying in full isn’t an option

LBC credit card pay off

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Everyone knows that you shouldn’t rack up credit card debit and you should only charge items/services that you can afford to pay in full when your monthly statement comes in. But for most people, it’s just not feasible. Emergencies happen, unexpected car repairs are needed, the list goes on and one. But maxing out your credit cards can have a sever impact on your credit score.

A high credit card balance, relative to your credit limit, can have a substantial impact on your credit score. The higher your credit card balance, the higher your minimum payment, and the more money you must allocate toward that credit card each month. A credit card balance that is 30% or below of your credit limit is considered a good balance. If you have a credit card with a $1,000 spending limit, maintaining a balance below $300 would keep you within the 30% range.

So, what do you do when you don’t have the funds to pay the credit card off in full, but you know you shouldn’t just pay the minimum payments? Stop adding new charges to the card and try to pay the balance off as quickly as possible, with the goal being 3 years or less.

Most credit card companies provide you with information on how long it will take to pay down your account by just paying the minimum payment, and how much it will cost you in the end. They also include a 3 year pay off plan in the chart with the monthly amount required to be paid, how much it will cost you, and the savings vs. paying just the minimum balance. Depending on your interest rate and account balance, this could be thousands of dollars!

There is one catch if you use the figures provided by your credit card company. These figures are recalculated each month based on your current balance. If you decide to follow the 3-year rule, you need to stick to the recommended amount listed on the statement when you first start. Otherwise it will take you much longer to pay down your cards, because that estimated amount drops as your balance drops. A simple way to take advantage of this pay off method is by setting up recurring payments that are automatically debited from your checking account each month.

If you have multiple credit cards with balances, best practices are to pay down cards with the highest interest rates first. Determine the total amount of money you can apply to paying down your debts and apply as much as possible to the cards with the highest interest, while still paying more than the minimum balance on other cards. has a handy credit card balance pay off calculator that can show you what it will take to pay off your current credit card charges.

Dealing with credit card debt is never fun, but you shouldn’t give up or get discouraged. Following a 3-year plan can still get your finances back on track. Have questions on how we may help you consolidate your debt? Give us a call or stop in!







Paul A. McLaughlin, Jr
Executive Vice President, Chief Operating Officer

Author: Paul McLaughlin

Paul McLaughlin is thoroughly familiar with the workings of Litchfield Bancorp. He started his career at the Bank as a teller in 1990 and was soon promoted to customer service representative and mortgage originator. Paul was then named manager of Litchfield Bancorp's Washington office in 1995 and, two years later, was promoted to assistant vice president and manager of the Oakville office. As vice president for retail banking, a promotion Paul earned in 2002, he became responsible for all sales and marketing - including training, product development and customer service - for the bank's five-branch network. In 2005, Paul completed a program at the highly regarded American Bankers Association's School of Bank Marketing and Management. In 2009, he was named senior vice president at the bank and in 2013, was also promoted to Chief Operating Officer. Paul is an active community volunteer. He served as chairman of the 2008 United Way fundraising campaign for Northwest Connecticut and continues to reflect the Bank’s deep commitment to community service.