For those who have a sizable balance on a high interest rate Visa or MasterCard, paying the balance off can be tough. That is because monthly finance charges consume your minimum payment and the balance only drops a small amount every month. Though settling higher interest debts first is the method for saving money in the long term, it may not be the best solution to your finances.
Request a lower monthly interest. Creditors are occasionally prepared to lower rates of interest, but usually for top level cardholder’s. People who have always paid punctually or have only missed a few payments. If you are getting offers for other bank cards with lower rates, you may use those offers for a bargaining chip.
Transfer the total amount to a preferential rate charge card. A few interest-free months may be all you have to pay off your balance. With excellent credit, you may be entitled to a good balance transfer interest rate. Do not limit your search to balance transfer credit cards. Among the best balance transfer rates are on reward credit cards. And if you do not have enough available credit to transfer an entire balance to a single credit card, moving just some of it will lighten the load.
Tackle smaller debts first. Getting rid of high interest rate debt first may not be the most beneficial strategy for you. Settling some smaller balances would restore money to put toward your larger, high interest debts. Create a list of your debts to figure out which may be paid now and which must wait. As you get rid of small credit card balances, do not forget to place that same payment toward another personal credit card debt.
Cut expenses. Disconnect your cable. Cut back on eating out. Decrease your smoking. Scale back on coffee and sodas. Lower your mobile phone plan. Squeezing more money from your budget offers you more to put toward your credit card debt. If you turn off satellite TV, you might have another $50 to put toward your credit card debt. Eat out one less time a month, and that is an extra $40. Combined, that is almost another $100 on your monthly credit card payment.
Wait a couple of months. If you absolutely cannot squeeze any other money out of your budget and you also cannot produce any extra income, you might need to delay your debt-free goal for a few months.
Keep making minimum payments on your own bank cards because which will keep the credit score from slipping and this will keep the debt from growing. Yes, you will be losing money on interest, but when you cannot afford to pay off your high interest debt right now, you then simply cannot afford it. Wait two or three months, reassess your budget and expenses to ascertain if anything is different.
Get credit guidance. Depending on what you owe, income, and expenses, a credit counsellor may be able to enroll you in a debt management plan. With a DMP, your creditors reduce your rate of interest and payment per month. The catch is basically that you cannot use your charge cards while you are on the DMP (not that you should use them anyway) and a note goes on your credit track record stating you worked with a credit counsellor.
You are then able to take advantage of the lower rates of interest by sending larger monthly payments and asking the credit counsellor to utilize the additional payment to your highest rate first. Keep at it and soon you’ll be debt free!