It’s a fact that most people own one or more credit cards. For them, the card is a basic necessity which they could not live without.

However, many credit card owners are not that responsible enough in managing and paying their debt. The result is they often end up having a high balance which they already find difficult to pay as time goes by.

Add to this the issue with the new and improved credit card statements as a result of the Card Act of 2009. The new statements include added clarifications and disclosures but unfortunately, many people still get confused about the numbers such as what they need to pay as what a new study has found. Unlike in the past, the monthly statement cardholders receive now explains the interest rates, monthly amount due and the time to pay off the debt. It contains a table that shows credit card owners the length of time involved if they pay only the minimum amount due every month and the amount they have to pay to settle their debt in only three years.

A new research, however, found that people do not fully understand how long it would take them to settle their debt if they paid a certain amount each month. The study conducted by three researchers from Duke University was presented recently during the Conference on Consumer Financial Decision Making.

According to the experts, there’s a trick to paying your credit card balance the correct way. The habit of many cardholders of paying only the minimum amount due each month is a big mistake. Do understand that when you pay a low amount, what you’re paying will only go to the interest of your debt.

The best move to do then is to pay more than the minimum amount required to lower your balance moving forward. This is because when you pay more, a huge part of your payment is then applied to the principal balance instead of going to the interest.

What the researchers suggest if you are committed to paying off your credit card debt in just three years is to do a shortcut and this is called as the “pay 3 to make 3” step. This means paying off new charges from the previous month and then you triple the initial interest you owe. As an example, you have to pay $450 every month if you have $300 in new charges and you’re charged $50 in interest. When you pay off the new charges, the balance stays the same. In addition when you triple the payment to your interest, the principal balance is also reduced.

So remember that if you can afford to pay more than the minimum each month, do so consistently. This will allow you to pay off your debt in a shorter time than prolonging the balance and allowing it to grow bigger.

As always, be a responsible card holder. Use your card wisely and pay on time to avoid jacking up your balance moving forward. And if possible, pay more than what is being asked each month.

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