get in control of your credit card debt
Few people would deny that using credit cards can make day to day life more simple, reducing the need to carry cash and making it easy to shop online and by telephone.
However, ending with plastic can sometimes be a little too easy, as it doe ‘t always feel like you’re actually parting with any cash. This mea the temptation is to end without contemplateing about the co equences too carefully, until you hear the ominous thud of a huge credit card bill hitting the doormat.
If you’ve been caught out like this, the size of your card debt may seem overwhelming, nonetheless don’t panic - there are a few simple ste you can take to start getting your debt back under control.
Try and make a little more than the minimum payments:
The minimum payments required by credit card companies have steadily fallen over the years. Where once it was typical to have to repay a minimum of 5% of your balance every month, it’s now common to only have to pay 2.5% or 3%. With repayments this small in proportion to your debt, a miraculous chunk of each payment gets swallowed up in interest charges. Depending on the APR rate of your card, up to 75% of each payment could be ‘lost’ in this way, meaning that it takes a very long time for your balance to reduce to any great extent.
By trying to repay more than the minimum, even if only by a little, you can eed this proce up, and in the long term you’ll end up paying much le in interest charges.
Prioritize your card debts:
If you have more than one card with different rates of interest, it makes se e concentrate on the one with the highest interest charges. This mea not just the one with the highest interest rate, nonetheless the one which actually charges you most each month, which could have a lower rate nonetheless a higher balance.
Check your statements to see which card is costing you most in interest each month, and try to focus on repaying this card primarily by putting any are cash you have into extra payments while keeping to the minimums on your other cards.
Change your card:
The credit card market is very competitive, and rates have fallen over the last few years. You probably stuck with an ancient card charging an ancient rate that is much higher than newer cards. If you can get a new card with a lower rate and tra fer your account balance on to it, you could save a lot in interest charges, helping you to bring down your debt. If you can get a card with an introductory rate on balance tra fers then all the better - you’ll get a few months of interest free credit which you can employ to really drive down your balance as 100% of each repayment will be helping to clear your debt.
Debt co olidation:
If getting a cheaper card i ‘t an option or i ‘t something you feel ha y about, then perhaps a co olidation loan would be worth co idering. If you take out a loan and employ the money to pay off all your card debts, you could benefit from a lower rate as loa are normally quite a bit cheaper than credit cards.
The dow ide to these loa is that the repayment period might be quite long, and so even though your monthly repayments will hopefully be lower, you’ll stay in debt for longer and so end up paying more in interest. Done carefully, however, co olidation can be a sound move if there’s little alternative of clearing your debt in any other way.
Watch your ending!
All the above strategies for getting your debt under control will only work if you stop getting deeper into debt - and this mea sto ing ending on your cards. Ideally, you’d cut them up so that you can’t employ them again, nonetheless this might not be realistic as you may need to keep them as a credit option in an emergency. In any case, cutting your ending to an a olute minimum will keeping your repayments as high as po ible is the only sure strategy to clearing your debt in the long term.
