Credit cards provide the convenience of funding purchases at any time. However, many people don’t devote time to finding out the actual cost of making purchases with one. They equally fail to notice rising interest rates which are a sign of overdependence on credit cards. Are you already dealing with a high interest rate on your credit card? Perhaps you are wondering if you should get a personal loan or credit card? This piece takes a look at some steps you can take towards reducing it.
Seek the services of debt management experts
Debt management experts can help you analyse your credit card debt and communicate with credit card companies in a bid to bring down the interest rates on your credit card. In situations where this is not possible, they can help negotiate a deal with the credit card provider to provide a lower monthly payment amount which will make it easier to pay your credit card debt.
Consider taking a personal loan to clear the debt
Peer to peer lending sites for example will offer personal loans with far lower interest rates than credit card providers. If you are high interest rates are preventing you from clearing your credit card debt, the proceeds from a personal loan can be used to cancel them out. Be sure to confirm that the personal loan offers considerably lower rates than what you have on all your credit cards combined. You can use an online loan calculator to do this. It is important to avoid developing a dependence on such personal loans as a result of the lower interest rates.
Although you are expected to always make payments on all your credit cards regularly, paying off the credit cards with the highest rates is a faster way to reduce credit card debt. Therefore, while paying off the minimum balance on other cards, put an extra 10-20% into paying off the debt on the card with the highest interest. Alternatively you can put more resources into paying off the credit card with the least balance to get it out of the way and slowly pay off the rest of the debt. Failing to pay off priority debts can, in extreme cases, result in visits from the bailiffs, being made bankrupt, or even losing your home so it’s important that you’re able to prioritise.
Cut down on expenses
This is undoubtedly one of the best things you can do for yourself. No amount of effort put into reduced credit card interest rates will yield fruits if you simply continue to use the credit card on a whim. You need to work out what constitutes as necessary or unnecessary expenses. In fact, you may be best served not using the specific credit cards anymore or getting new ones until you have completely dealt with the backlog.