Tackle your credit card debt in 2017
Credit cards may seem like the perfect solution to financing unplanned or emergency costs but too many people use the funds available for day to day expenses, running up huge debts and paying equally high rates of credit.
If you make one New Year resolution for 2017 that you plan to keep, then tackling your credit card debt should be it.
Here are some top tips from www.consumerhelp.ie on tackling your credit card debt.
Stop using your card
If you want to clear your debt, you need to stop adding to it. Resist the temptation by leaving your card at home.
Pay as much as you can
Pay off as much as you can each month so that you reduce your debt as quickly as possible. If you are only making the minimum repayment each month, it will take you a long time to pay off your balance. Paying more than the minimum payment could help you reduce the time it takes to become debt free. You can use our clearing your credit card calculator to see how increasing your monthly repayments will help you pay off your debt faster.
Ask fro a reduction in interest rates
Ask your credit card provider if they will consider reducing the interest rate on your card. This will reduce the amount of interest added to your credit card debt each month.
Look at switching to a cheaper card
Think about whether you could switch to a credit card that has a low rate of interest, or 0% interest, on balance transfers. Check out our credit card comparison to see what rates are currently on offer. If you are able to move your balance to a credit card with 0% interest for a period of time, then every cent you pay would reduce your debt. Use this clearing your credit card calculator to see if you can pay off your credit card debt faster by switching. Remember, this only works if you repay the balance during the interest free period and you don’t use the card! And if you do want to switch, your new card issuer will look at your credit history, employment status, income and the level of debt you have, including any credit card balances that you want to transfer.
Reduce the credit limit
Consider reducing the credit limit to an amount you can comfortably afford to repay every month so you are not able to run up debt you cannot repay.
Don't miss repayments
Don't miss repayments or pay later than the due date or you will be charged late payment fees. You could set up a monthly standing order or direct debit for the minimum monthly repayment, or more if you can afford it, to avoid late payments. Late payment fees vary depending on your credit card provider. Late payments can also appear on your credit history.
Choose a card you can access online
Choose a credit card that you can access online. This will help you keep track of your credit card balance and how much you are spending. Check out this handy credit card comparison to check what fees apply to different cards.
Don't use it to get a cash advance
Try not to use your card to withdraw cash, as interest is usually charged immediately, and can be higher than the interest rate for purchases. There is also a cash advance fee.
Review any payment protection insurance
Review any payment protection insurance (PPI) you have on your credit card. If you have this cover on your credit card, consider whether it’s worth paying for. PPI usually only covers the minimum repayment amount for a limited period of time and is charged as a percentage of your outstanding balance so, the more you owe, the more you pay for it.
Consider a debit card instead
Consider whether a debit card would be a better option for you in the longer term. Or, you could consider getting a prepaid card that can be used for purchases wherever a credit card is accepted.
If you are experiencing difficulty making your repayments and don’t know what to do, you can get help from the Money Advice and Budgeting Service (MABS). See here for more information.