The excitement of using credit card balance to pay the minimum amount will last for some time. British people with millions of balances have found the risk of minimum payment after feeling the stimulation of the attendant handover fee. The latest statistics show that the average debt of British families is 6020 pounds. If you only pay the minimum repayment, These debts will take 291 months to repay, with interest of £ 8453.00.
Even if there is a reasonable reason to accumulate high interest rate debt, the primary task is to repay the debt. Before getting rid of debt, start with a solid debt reduction plan. Here are five strategies for eliminating credit card debt.
Aim at one card at a time
If you owe more than one card, You need some time to pay off all your debts. When the credit card is settled for a few years, it is hard to see the future and remain motivated. Pay off a card and cheer yourself up. Take the card with the lowest balance as the target, and invest as much as possible before settling the balance.
alternatively, you can choose the credit card(balance/credit card limit) with the highest usage rate for payment. After the balance is settled, the credit utilization rate will directly affect the score, so the psychiatric credit score will be improved immediately.
Negotiate with creditors to reduce interest rate.
Borrowers are generally reluctant to negotiate to cut interest rates, but it is worth a try. If you have a good credit score and are responsible for your payment and use of credit cards, The borrower will consider your requirements. If it is reduced by 1-2 percentage points, hundreds of pounds can be saved every year. In order to compare interest rates and negotiate, obtain quotations from competitive borrowers. Your borrower will hope that your quotation is consistent with your quotation.
Note: Your creditors should review your credit report before making a decision. If they don’t like your credit card, they can lower your credit limit.
Balance transfer
More and more consumers are exploring credit card balance from one card to another in order to obtain the best interest rate. This may bring hundreds of pounds of savings, but if not planned in advance, there will be risks.
Balance transfer is only effective when you promise to repay the balance transferred during the initial low interest rate period. This will allow 12-30 months according to the credit card. After that, the interest rate will rise, and you will pay the high interest rate again.
Important balance transfer cards can only be used to repay debts and cannot be used for new purchases. Therefore, low interest rates may not be suitable for new shopping, so do not use credit cards for shopping. In addition, most borrowers charge balance transfer fees, so the fees are calculated when comparing credit cards.
Obtaining loans
If you are burdened with high interest rates, consider borrowing money to pay back your credit card. Your friends and family may be willing to help. However, if this is not the case, fixed rate loans provided by banks and individuals to individual lending institutions are 20 to 30 times lower than those provided by credit cards. This means you can save hundreds of pounds in interest on your debt. If you have good credit and stable salary, you are eligible for competitive interest rate loans.
Minimum payment
If money is not tight, you can always pay the minimum amount, but try to pay the minimum amount twice a month. Interest is calculated on a daily basis, and early payment can reduce your average daily balance and interest expense. Maintain a minimum payment twice a month until your debt is paid off.
Rising interest rates make debt servicing a challenge. Ideally, you can’t make mistakes at the beginning, but life is learning from mistakes. The effective methods listed above can help you make a battle plan to solve the debt. Remember, the most valuable tool in this fight is a commitment to financial goals.
