Loan Repayment Strategies: Do’s and Don’ts

Everyone looks forward to the day when they can honestly say they don’t owe anyone anything. The road to financial freedom can be long and tedious, but employing the right strategies for loan repayment — and avoiding the wrong ones — can shorten the journey and save you a considerable amount of cash. There’s a lot of how-to advice out there about debt payoff, but not all of it is advice worth taking. Here are some do’s and don’ts when it comes to strategies for a faster loan payoff.


You can’t pay off your credit cards if you keep using them. When you shop, keep that plastic in your purse or wallet and use cash. Paper money feels more real, and you’re more likely to pause before you buy if you have to break a $20 bill for that latte you don’t really need. It’s too easy to spend frivolously when you’re just swiping a card. Put cash into envelopes for the things you need such as gas and groceries. When the cash runs out, it’s gone, which will automatically limit your spending.


Using debit and credit cards instead of cash can lead to unnecessary splurges like that scone with your Starbucks, on-sale items you really don’t need and even extra grocery items that will sit in the pantry until they expire. The unnecessary spending can cause budget creep and high interest credit-card debt, making loan payoff much harder.


If you have a good payment history with your credit card issuer, call the number on the back of your card. Tell the customer-service representative you’re unhappy with your current interest rate and want to find out if there is a way to lower it. If needed, ask to speak to a supervisor. Better yet, sift through your mail for new lenders offering a long-term 0% interest rate on credit-card balance transfers. Transferring your balance to a lower- or zero-interest card can buy you time and save you a lot of money that can be applied to debt payoff. Know when the 0% APR ends and what the rate will be afterward so you don’t get hit with a skyrocketing interest rate. Be ready to pay off the balance or find a different card with a zero-percent offer when the current interest-free period expires.


Consolidating debt into a single payment sounds like a good idea, but avoid getting locked into a loan repayment plan you can’t maintain. Ask yourself whether you have the money available in your budget to make this payment every month and still cover your living expenses, maintaining an emergency fund and other obligations.

AutoPayPlus can help you pay down debt faster. Withdrawals from your account every other week fit conveniently with paychecks and your monthly budget, while an extra half payment twice a year toward principal reduces interest over the life of the loan. Please visit our website to learn more about smart loan repayment strategies.



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