Living with credit, New products

Micropayments can help you tackle big balances

Kelly Dilworth

Paying hundreds of dollars at a time to your credit card company can feel so overwhelming that it’s tempting to send just the minimum amount due and forget about it. But as any card expert will tell you, that’s a mistake.

You’ll not only owe more overall, you’ll have a harder time freeing yourself from your debt since it will likely take years before you’re rid of it.

A better tactic is to break up your monthly payment into more manageable chunks – just as you might break up tasks on a big project in order to make it feel less overwhelming.

How to divide and conquer your credit card debt

If you divide your monthly credit card balance into periodic micropayments – rather than try to pay it all at once – you’ll make it easier to pay down your debt more quickly and take the sting out of everyday bills since they won’t seem so unaffordable.

For example, instead of sending $200 at a time to your credit card company, you could schedule three weekly payments of $17 – about the price of a nice dinner out.

Or, you could make paying your bills even easier by shrinking your payments further and sending them more frequently.

How micropayments chip away at debt: If you transfer $5 every other day to a balance transfer card with a 0 percent interest rate, you’ll knock out $1,000 in debt in just under a year. Similarly, a weekly $10 payment could help you clear more than $500 from your credit card balance.

Card issuers, apps make it easy to automate micropayments

What got me thinking about micropayments to pay down card debt? The micro-savings app Digit plans to launch Digit Pay to apply users’ small change to erase their credit cards.

The aim, Digit says, is to help people chip away at card debt “without thinking about it.”

The downside to Digit’s new debt busting tool: An account costs $2.99 a month. There also is a waitlist.

Why pay a monthly fee when your card issuer may currently automatically transfer payments several times a month to help you clear your debt more quickly?

U.S. Bank, for example, offers a FlexControl Accelerator that lets cardholders schedule weekly automated payments in any amount you choose.

How the accelerator works: You could set the accelerator to pay $15 a week for a full year, clearing $780 from your credit card balance. Or, you could be more aggressive and set it to debit at least $30 a week, erasing more than $1,500 in card debt over 12 months.

Make multiple payments to take control of your debt

If your card issuer doesn’t offer multi-monthly autopayments and you don’t want to pay for an app to pay down card debt, you can make multiple payments manually on your card.

Making multiple payments per month won’t be as seamless as automated payments, but it should help you get over the hurdle of paying such a large amount each month and will get you into the habit of regular payments.

You may even feel inspired to pay more overall than you would if you just stuck to one lump sum.

Just be sure to pay significantly more than the minimum payment due. The more cash you scratch up for your bill each month, the sooner you’ll be rid of your credit card debt for good.

See related: 8 steps to reducing credit card debt, New ‘Roseanne,’ old card debt: Here’s how to erase yours

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  • SKcomments

    I have been doing something of this sort for a couple of years. I treat my credit card like a debit card. When I make a purchase, I immediately use the banking app on my phone to send an equal payment to my credit card company.