Crushing Credit Card Debt!
Credit Card Debt Australia
In Australia, more than 70% of adults have at least one credit card. With over 15 million credit cards around, odds are that some of us have to face the consequence of our overindulgence: a credit card debt.
How to Settle Credit Card Debt
What’s the best approach to settle credit card debt? This depends on the amount of debt, the quantity of cards and your individual situation. But in general, the choices include:
– paying out the balance in full prior to interest builds up
– paying the highest amount you can afford every month to get rid of the debt as rapidly as you can
– (if you have multiple credit cards) paying off at least the monthly minimum on each card, while making a larger payment to the card with the highest interest
– transferring your balance to a new credit card supplying a lower interest period
– consolidating your debt into your home loan
At all costs you should prevent paying ONLY the minimum monthly repayment or you might be in a cycle of debt that will NEVER resolved.
Come up with a plan to settle the credit card debt as quickly as possible is the best option.
Transferring Credit Card Debt
Many lenders now present credit card balance transfers with a range of rates and offer periods. You move the balance from your used credit card to a new card at a reduced interest rate for a set period to get ‘interest breathing space’ which helps you to pay off your debt quicker.
To ensure a credit card balance transfer works for YOU it is really vital to know the terms and conditions of the card AND to maintain discipline with repayments.
Things to know before a credit card balance transfer
– To reap the benefit you should pay ALL the transferred balance within the offer period.
– Know the end date of offer! If you can, set auto payments each pay that will clear the debt before that date.
– The transfer balance at the offer end date will bring in interest at the card’s standard interest rate.
– New purchases typically attract the standard interest rate, NOT the transfer interest rate.
– Know what fees apply and when they are due, such as annual fee or the percentage of transfer amount.
Most importantly, cut up your old card( s) so you are not tempted to rack up even more debt while paying down the original debt!
A balance transfer should not be used habitually to manage recurring periods of debt! Bad financial habits and/or numerous credit enquiries may badly affect your credit score– even if the enquiry didn’t continue. This could influence your chance to be accepted for a home loan in the future!
There is another way …
Consolidate Credit Card Debt
Together we can look at consolidating all of your debt (credit card debts, personal loans, car loans etc) into one loan with a much lower interest rate.
If you are a home owner your home loan typically has the lowest interest rate.
Choosing YOUR best option should involve developing a budget, being brutally honest about your self control when it comes to spending and monthly payments and then finding the fastest and lowest interest choice to get rid of your debt.
Need help building a custom plan to settle your credit card debts? Give us a call, we are at your service.
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