Tips on how to crush credit card debt
IF you are in over your head with credit card debt, these tips will help to get it under control quickly. Credit card debt can be a tough burden to carry, especially when unnecessarily high interest rates continue to compound and grow the interest cost each month. Throw in maybe a mortgage, another credit card or two and things can quickly appear unmanageable.
If this is a bit too close to the bone, it could be time to consolidate your debt. This means bringing it all together onto the lowest possible rate and setting up a payment plan to wipe the slate clean.
You’ve got three main options.
Combine debts on a personal loan
The key benefit of a personal loan is that it has a set term. That means repayments are calculated so that at the end of the loan period the debt is cleared.
While you might still wear an interest cost of 8 per cent to 14 per cent, that’s still likely lower than your credit card and the set term could mean a bigger saving because it makes you clear the balance once and for all.
Transfer balances onto a low-rate credit card
This is a popular option because the balance transferred often enjoys an interest free term, as long as 14 months. The key to making it work is setting up a repayment plan, just like a personal loan would, to ensure the debt is cleared in that interest free period.
Just be aware that once that interest free period ends the balance will revert to the normal interest rate so you might find yourself rolling the balance over again, which can incur costs and have credit history implications.
Consolidate all debts into your mortgage
If you have a mortgage and have accrued a bit of equity in the property, this approach can be a super interest saver. But, just like with credit card balance transfers, you need to have the discipline to increase mortgage repayments to clear the debt.
Picking the best option involves drawing up a budget, being honest about your self-control in spending and repayments, and then finding the best deal on offer.
As Myles Kelly of Advantage Mortgages Australia asks ‘Why do you even have a credit card? what is your excuse? Purchase online, emergency, purchase airline tickets? If you carry more than one dollar in credit card debt from month to month there could be a very good chance you are spending above your means. If this is the case your situation may be greatly slowly worse month by month. If you are carrying credit card debt let us show you very good strategies to eliminate credit card debt fast improving your position every month.
Contact Us at Advantage Mortgages Australia to book a meeting with one of our qualified finance professionals to assess your situation. www.advantagemortgages.com.au.
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