Slash your Credit Cards and Loan Debts!
Slash your Credit Cards and Loan Debts by trying out these suggestions.
1. There are several schools of thought on how to manage credit card debts. You can pay as much as you can afford on each card, but it seems like the debt never seems to get any smaller and over time you lose heart. My suggestion is that you tackle the smallest debt first. Pay the minimum on the rest but the maximum on the smallest debt. That way you can see an appreciable amount coming off each month not to mention a lower interest charge on that card. It follows, that eventually you will have no debt on that card. It also then releases the minimum amount that you would have had to pay on that card which can be allocated to the next smallest debt and so on. Psychologically this will give you encouragement when you see the progress you are making. You’ve heard about compound interest? That’s where interest is charged on the interest and it amounts to a considerable debt which is good for the lender but not the borrower. Well, this is using the power of compound interest in reverse – I call it ‘compound saving’! The next section suggests a way of finding that extra payment so that the interest charge is reduced.
2. How do you pay for your everyday food, petrol, etc.? Some people pay by cheque & the money leaves their Bank account without benefiting them. Isn’t it better if the money you have budgeted to spend on these everyday items went first to reduce or eliminate your smallest credit card debt? Then you can use that same card to pay for the everyday items having saved the interest charge, on the card, that you would have been charged. In other words, the money paid in ‘earns’ the interest that is charged by the credit card companies. Further, if you then spend less than the budgeted figure the benefit shows in the lower credit card balance. This option needs iron will power! Don’t overspend otherwise the exercise is useless.
3. 0% interest on transfers. Many credit card companies are offering 0% interest on transfers & lower initial interest rates. The credit card/s that’s charging you the most interest is the one to pay off with this method. Check the terms out very carefully before you apply. Bear in mind that this action alone won’t make the debt disappear; you still have to use the ‘free’ period to reduce or eliminate the debt. Most people don’t & the spiral of debt continues. It really makes me laugh when I hear some ‘hooray Henrys’ boasting that they keep .... Read more...