Small extra payments don't feel like much. On a credit card, they can cut years and thousands of dollars.
The same card, three ways
Here's a $5,000 card balance at 24% APR with a fixed $150 monthly payment, and what happens when you add a little on top.
Fixed payments, 24% APR compounded monthly. Your card's actual terms will differ.
Why it works so well
Every extra dollar skips the interest line and goes straight to your balance. A smaller balance means less interest next month, so more of your regular payment reaches the balance too. The effect compounds in your favor.
Where to find the extra
- A subscription you forgot about (the average is more than you'd guess).
- Rounding every purchase up to the next dollar.
- Half of any raise, refund or side income, sent straight to the card.
On a high-interest card, every extra $1 you pay today is worth more than $1 later, because it stops interest from growing on it.
This tip is general education, not financial advice. Examples are illustrative; your balances, rates and card terms will change the numbers.