How to Use Credit Cards to Pay Down Debt and Build Good Credit

Lots of us struggle with debt at different points in our lives, and when you’re in a challenging financial situation it can seem inescapable.

You need to know that there’s always a path forward, and with the help of a few of the following tips, you could reduce what you owe and improve your credit score at the same time.

Harnessing balance transfer offers to make repayments more manageable

Your first act must be to tackle any high interest debt obligations, of which credit cards are the most common example.

If you’re currently using a card which has an eye-watering amount of interest attached, it can be a struggle to hit the minimum repayable amount each month, let alone pay down the balance itself.

That’s where balance transfer offers come into play. Many reputable providers will let you move your balance over from a rival firm, while giving you juicy incentives for doing so, such as low or no interest during a fixed introductory period.

Once your balance has been shifted across, you can get to work on paying it off without feeling the pinch of interest piling up. You can begin this journey by getting approved for a SoFi credit card, leaving the unfavourable rates of old cards behind you.

Establishing good habits

You shouldn’t see paying down debt as a one-time thing, because unless you learn from the mistakes you made to get into this situation, you’ll be doomed to repeat them.

First, having a handle on your monthly budget is essential. You need to see how much you’re bringing in, how much you’re spending, and whether there’s waste to clear up.

Next, you need to start saving money, not just splurging it all as soon as it arrives in your account. Saving is not just a way to prepare for making big purchases further down the line, but also to keep cash aside for emergencies so that you don’t need to rely on high interest debt to get out of a tight spot.

Last, it’s worth thinking about other options for making your money work for you, such as investing. There are various influencers out there who can guide you at first, but you might also consider using automated investment platforms to avoid needing to do all of the research yourself.

Building good credit

What many people don’t realise is that in order to improve your credit score, you actually need to use your credit card. So long as you are doing this responsibly, in line with your budget and in keeping with the good habits mentioned above, there’s nothing wrong with making purchases on a credit card, and in fact it’s advisable.

The reason for this is simple; buying products and services with your credit card and then paying off the balance each month will be evidence that you’re a financially responsible individual, and will be reflected in your credit score.

The same applies for any other debt you acquire. If you take out a loan, always hit the repayment deadlines and don’t miss a single month, or your credit score will suffer.

Having no credit history to your name is a problem, because lenders won’t know whether or not you can be trusted, so you could struggle to take out loans in much the same way as someone with bad credit.

Final thoughts

The sooner you make a move to pay down debt, the sooner you will be free of high interest deals and unlock more appealing offers further down the line as you build credit. Start today, don’t delay, and the rewards will be yours for the taking much faster than you’d think.

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