Is your credit card debt spiralling? High-interest rates and minimum payments can keep you in an endless spiral of debt. Tips to break the cycle:
- Pay more and save
Don’t think that just paying the minimum required amount monthly will reduce your credit card debt. Banks only charge interest if you don’t pay off your credit cards in full each month. If you pay the minimum amount only, you’ll be charged interest and this grows or compounds the longer you remain in debt. Paying more than the minimum will save you hugely on interest charges. It’s even worth sacrificing holidays or thinking twice about buying “unnecessary luxuries” to do so.
- Pay highest interest first
List all your credit card debts from the largest interest rate to the smallest. Pay as much as you can toward the card with the highest interest rate and pay the minimum required payments on the rest. When you’ve paid off the highest-interest card, go to the second-highest, and so on. This can prevent you from racking up interest charges as you’re trying to dig your way out of debt.
- Stop spending on credit
The biggest mistake that most of us make when paying off credit card debt is that we keeping using our cards. A credit card is costly plastic money that you don’t have, and you’ll never get anywhere if you keep spending.
- Debt consolidation
Struggling to make even the minimum payment requirements on your credit cards? Ask your bank if you qualify for a debt consolidation loan that combines all your debt into a single monthly payment at the lowest interest rate possible. This allows you to get out of debt faster. If you don’t qualify for a debt consolidation loan, ask for a debt management programme. A credit counsellor will help you negotiate with creditors and consolidate your monthly payments into one payment that is paid to the credit counselling agency. Each month, they distribute the payment to your creditors on your behalf until you’re debt-free.
To understand the options available to you, please contact LifeAssist. We are here to help you navigate your path to financial freedom.