How To Lower Your Credit Card Debts
We discovered that the current growth of UK debt is £1million every 8 minutes and we all contribute a stonking £263 million in interest a day and your worried about your credit card debts. There is currently 27.4million credit cards transactions made a day with a total value of £1.56billion.
The total credit card debts in the UK for September 2008 was £55.7 billion and the average adult in the UK has approximately 4 credit cards, a store cards and debit cards.
People are looking for the secret to paying off their credit card debts. We make our monthly payment and then find that we paid more in interest than the amount that was reduced off our outstanding balance. Frightening isn’t it!
When you look closely at your credit card statement you will see that the interest rates are somewhere between 0% and 27% per year depending on the provider. The average credit card is generally around the 17% +/-mark and it’s little wonder most people have credit card debts
The Secrets To Paying Off Your Credit Card Debts
- Consolidating your credit card debts into a loan over a longer period of time to reduce your monthly costs should be your solution of last resort when trying to reduce your credit card debts. Only consider consolidating your debts if you have limited disposable income and a clean credit record. If you can afford to pay extra money off your credit cards each month then you will reduce your overall interest costs and you will reduce your repayment term. This only works if your STOP using your credit cards
- Shop around for a credit card provider who offers a 0% credit card deal for the longest period of time. The normal 0% offers are for 6, 9 or 12 month periods before reverting back to normal high interest rate. Check the providers transfer fees for moving your balance to them and see if you can find a provider with either a lower fee or even better no transfer fee. Make sure that you move the balance to another card at the end of the 0% deal. If you don’t then you will certainly go on their worst interest rate deal. Don’t try and arrange too many 0% deals in the same month as you could find yourself being turned down. Only move one or two cards every couple of months if you want more 0% deals.
- It is also worth considering a credit card with a low interest rate for the term of the balance. But don’t spend any money on it as the interest rate for new purchases will be exorbitantly higher.
- If you are paying any Payment protection Insurance then you must see if you can find a cheaper policy to cover all your outstanding cards elsewhere. You should cover yourself for accident, sickness and redundancy with the same cover or better. Then cancel the credit card protection insurance from your credit card.
- Make sure you move all of your credit card balances to lower interest rate offers. The lower the credit card interest rate is the lower your credit card costs will be and the more capital you will pay off your credit card debts.
- Don’t forget you can always ring up your credit card provider and ask what deals they have. It might be a better deal then you are currently on and any deal that is lower than you are paying now is better.
- Now you have rearranged your credit cards you should start paying as much as you can comfortably afford off the highest interest rate cards first and the minimum allowed off the interest only cards. Get the highest interest rate cards down as quick as you can. Keep moving those cards to the next best interest rate deal as soon as the last deal finishes until all your credit cards have a ZERO balance.
- Once you have cleared your credit card balance then cancel the credit card and move the money you were spending on that card to your next highest credit card and watch as your balances just fall away.
- Get into the habit of using your debit card instead of your credit cards and you will find that this quickly curbs your passion to spend more than you can afford. Because as soon as your debit card goes overdrawn you will be charge around £20 to £37 depending on which bank you use. You will quickly realise that you can only spend what you can afford.
- When your credit card balance has reached a Zero balance and you only have one credit card left in your wallet or purse then you should reward yourself as you have earned it! What a Result! Congratulations
Free Of Your Credit Card Debts
Now that you have graduated from being free of credit card debts and you are in control of your finances you could consider using your credit cards to make some tax-free- money. Having qualified as a Master Credit Card Tart you could apply for a 0% credit card and then withdraw the full amount of your credit balance and buy National Premium Bonds. Then pay the minimum monthly payment allowed for the duration of the0% period . At the end of the 0% deal move the balance to the next 0% deal and so on. Here is the best bit it will never cost you anything for borrowing the money and all the winnings from the Premium Bonds are tax-free and all yours courteous of the credit card company. You could also be one of the two lucky £1million Winners that they announce each month. What a flexible friend you now have!
The above suggestion will not suit everybody as you will need to be strong willed.
Your thoughts and comments about how you cleared your credit card debts are welcome below.