Managing a credit card debt sounds like a daunting task but if you follow an effective strategy, you can do it easily. Credit card debt keeps on increasing if you do not repay it on time. The continuous increase of this debt can be very damaging to you and can cause undesirable results if you do not manage it on a timely basis. You should seek advice of Your Personal Financial Mentor because he can help you decide how to pay off all your debt without affecting your financial prospects.
Pay more than the minimum repayment
It is a good sign if you are paying more than the actual interest payment. Credit card companies value their customers if they make regular repayments. But with these repayments, you are only paying off interest and just a small amount of your actual debt. In order to get rid of the credit card debt, you should pay more than you actually owe every month. You will be debt free in a short span of time if you pay off your debt quickly.
Highest rates should go first
If you possess more than one credit card, then you should try to pay the debt of your high interest rate credit cards first because it will reduce your overall cost in the long term. However, you should not forget the low interest rate credit card debt while paying for the ones with the higher cost. If you do so, you may end up facing extra costs of not making regular repayments. Therefore, try to maintain a balance between the repayments but structure your repayments in such a way that you pay off the high cost debt first.
Consult your credit card companies
If you are caught up in a critical situation, you should talk to your credit card companies for help. Many credit card companies lower the interest rates for the time being and also waive certain fees like late fee balances, to help you stabilize your financial position.
Make transfers from one credit to another
When you are transferring your credit card debt from high cost credit card to a lower cost or zero cost credit cards, you should keep in mind the validity of the credit card. Having a zero interest rate credit card with 6 month validity is not so attractive as compared to the 2% interest rate credit with 18 months validity. Moreover, you should also keep in mind the transfer fee that you have to pay while transferring the debt from one credit card to another. Usually, transferring to a zero interest credit card has a higher transfer fee than transferring to a low interest credit card. Also, you should confirm what the interest rate will be once the introductory period is over.
Track what you spend
You should not just repay on a random basis every month. Devise a strategy, prepare a budget for spending and track them on a day to day basis. Try to use your credit card only when you really need it. Do not use it lavishly or else you will end up crushing yourself under a pile of credit card debt.
If you are expected to receive a tax refund this year, try to set aside a fixed amount of this refund to pay off your credit card debt. Many people consider it a jackpot and spend the whole amount on unnecessary shopping. However, if you use this money to pay off your debt, you are likely to have a peaceful time in years to come.
Sell small luxuries to lower your debt
No one likes to sell their luxuries. But in order to save yourself from a long term burden of heavy cost, you should consider selling off your personal luxury items. You can choose alternative means of entertainment like borrowing a DVD from a friend instead of purchasing it but you cannot find alternative means to get rid of your credit card debt than to make a regular payment.
Categories: Credit Cards