5 Top Tips to Help Clear your Credit Card Debt
It’s easy to get in over your head when it comes to credit card debt. You receive countless “pre-approved” application forms in the post, and before you know it you have a credit card with a considerable credit limit at your disposal. It only takes a small mistake or misfortune, one missed credit card payment, and things can quickly spiral out of control, leaving you with minimum payments which you can’t afford to make, going further and further into debt each and every month.
This happens on a daily basis, all around the world. People are constantly finding themselves unable to keep up with their repayments and end up getting further in to debt, with no end in sight. But, there are a number of things you can do to help get your credit card debt clear as quickly as possible.
1. Move your Debt to a 0% Interest Balance Transfer Card Debt Consolidation is a good way to go; if your credit rating hasn’t been affected too much by your current situation, then you could apply for a 0% Balance Transfer Card to consolidate your debt to, enabling you to transfer your debt from your current credit cards, over to a 0% Interest Account. This will mean that for a period of time (usually 1 year) all the money you pay off of your account will be paying off your debt, rather than simply paying interest payments.
2. Pay off the Highest APR Card First If you have multiple credit cards which you are struggling to pay, then you need to work out how much money you owe on each card, and which cards hold the highest APR. Once you have worked this out you will be able to see which card is costing you the most in interest, and make that card your priority for repayments.
3. Pay Every Extra Penny you Can Afford You will have to forget about all of your luxuries for a while, but it will make you feel better in the long run. Put every extra penny you have at your disposal into paying off your credit card debt. The more you can pay off each month, the less your interest will be the following month.
4. Cancel your PPI This might not be suitable for everybody, but cancelling the Payment Protection Insurance on your credit card could save you a lot of money each year and reduce your monthly payments. PPI is supposed to protect your payments in the event of accident, sickness or unemployment, but it’s very expensive, overpriced, and could be adding as much as $500 a year to a $5,000 debt. So, cancel it if you can!
5. Don’t Miss Payments Sometimes there will be no way you can make a payment on time, but in the event of missing a payment on your credit card you will be charged a considerable amount. Most credit cards have at least 1 charge for missing a payment, and numerous cards have up to 3 separate charges for 1 missed payment (missed payment charge, returned payment charge, default charge”). So even if you have to borrow from a friend to make your payment on time, it will save you money in the long run. One missed payment could add on a considerable amount of money to your next minimum payment, an amount you might not be able to pay the next month, which could send you on a downward spiral.
The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.