Any food or drink-related illness should be gone by now – but the financial headache can last a lot longer. If your credit card balance is out of control, here?s a strategy for getting it paid off ASAP.
Consolidate your debt
How to consolidate debt is a popular topic at this time of year and with the average credit card interest rate running at more than 17%, transferring your credit card debts to a low rate card or taking advantage of a 0% balance transfer deal can potentially save you a lot of interest. On CANSTAR?s database you can find an ongoing credit card interest rates under 9% – you can compare credit cards here. There are also a number of 0% balance transfer deals available. You can compare balance transfer rates here. Whether you choose a balance transfer deal or a low rate card, the important thing is to minimise the amount of interest you pay each month. That way, more of your repayment is being put towards paying down the debt.
Work out how much you can afford to repay each month
What is a comfortable repayment level that still allows you to afford your living expenses? Calculate what that amount is and then divide your total credit card debt into that amount. That gives you a rough indication as to how long it will take you to repay your debt.
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Take your credit card out of your wallet
There?s no point making a heroic effort to pay down your current debt – only to run up a new one to meet your living expenses. So make the vow to use cash only between now and D(ebt-free) Day.
Find some extra savings
Okay, you know what your comfortable repayment level is – so what?s your uncomfortable repayment level? Repaying your credit card debt sooner means less total interest and more money in your pocket. Think about whether there are any ways for you to easily save over the next few months. Magazine subscriptions, bought lunches and coffees, alcohol, dining out, iTunes … there will be dozens of ways for you to save a bit of extra cash if you just put your mind to it. Here are 70 ways to save money, to get you started.
If you need a little extra persuasion to make your debt reduction plan a reality then just think how much that debt could potentially cost you over time. By making minimum repayments only on a debt of $6,000 at an interest rate of 17%, you could end up paying more than $18,000 in interest costs over the life of the loan. Don?t do it!