Reduce Your Credit Card Debts
While credit cards are a handy source of credit, relatively high interest rates mean they can be very expensive if you fall into debt. Many credit card users get in the habit of only paying the minimum due each month and allow debt and interest charges to spiral upwards.
However, with a little discipline and a bit of savvy you can reverse this trend. Here are some tips on how you can slash your credit card debt and save yourself a lot of money.
Find a better rate
You may need to look for a new credit cards with a lower APR as a first step in cutting your credit card debts is cutting down the amount of interest you pay so you can focus on paying the actual main debt off. The APR dictates how much interest you pay on what you owe each month and, ultimately, how quickly your debt grows.
So, find out how much you pay on your credit card and research the market to see if you can find a card with a lower interest rate. Most of the time you’ll find shopping around will find you a better deal.
In addition, many credit cards offer special introductory offers, such as no interest for six months. In some cases, these will also apply balance transfers from your current credit card so you could save yourself a lot of money in interest rate repayments, and give yourself a chance to clear some of that debt.
Make sure you are aware of the balance transfer fees in the fine print. Many lenders charge a fee for taking on your old debt that could negate any money saved on interest rates, so be sure to do your maths before making a final decision. Also, be sure to compare credit cards to ensure that you are getting a good rate of interest after the special introductory rate expires.
Clear your debt
Unfortunately, credit card debt consolidation involves facing some hard facts. While lower interest rates and balance transfers will save you money, at some stage you will have to face facts and begin to pay off what you owe. If you have a large credit card debt it is not enough simply to make the minimum payment each month. At the very least you need to cover the interest so your debt does not continue to grow.
Ideally, though, you should be reducing the debt each month. It may take some discipline but it is well worth the effort. If possible use any savings you make from lower interest rates to help push down your balance owing as fast as possible.
Keep a close eye on your spending habits
Good spending habits are essential for credit card debt consolidation. If you still find yourself using your credit card to make purchases you should consider locking it away for emergencies. With a credit card in your wallet there is a constant temptation to spend – not what you need when you’re trying to get back in the black. Try switching to a Visa debit card instead than credit cards.
Avoid fees and charges
A lot of credit card debt problems arise from indiscipline. Spending beyond your means is one root of the problem, but failing to adhere to the credit’s cards rules is another common pitfall. If your running above you agreed limit or failing to make repayments of the minimum required by the due dates each month you could be paying an extra $50 or so a month that can be easily avoided.
Get a loan
If you currently find yourself in the postition of having large debts with high interest you could consider moving the debt to another loan. It should only be considered after other options are explored but the lower interest rates for a fixed period if used well offer an opportunity to take control of finances. Some lenders may be reluctant to give you a loan considering the debt you have already built up, but if you have a clean credit rating and a decent income you should be okay.
Article by Richard of the click4credit.com.au.
