Tips To Get Out Of Credit Card Debts
Credit cards, by nature of it offering the card holder a period of credit for purchases, more often than not leaves the card holder in debt when the card holder is unable to manage the spending wisely. Compounded (pun intended) with the high interest rates chargeable on outstanding balances plus fees and penalty payable, what seemed to be a small amount outstanding can snowball to an unmanageable credit card debt in a couple of months. I was previously having recurring outstanding balances but thankfully, have managed to get them fully paid without any penalties being taken against me. These are some tips which would be useful to you to get out of credit card debts.
Talk
If your credit card debt is getting out of hand, pick up the phone and call the credit card issuing financial institution. Better still, pay them a visit. Tell them about your current financial situation and request for time to pay - perhaps to lower the interest rate of your credit card (it is a long shot but worth exploring since you have nothing to lose) or to restructure the debt. Some financial institutions can be flexible in meeting this need. After all, they only want your money and if you can demonstrate to them that you will be able to pay albeit for a longer period of time, it would still benefit them.
Stop
Put away your credit cards and reassess your spending habit. Don’t incur anymore expenses on your credit cards because it would snowball the interest charges if you fail to settle the previous month’s outstanding amount. Be frugal and only spend on necessities, not wants or luxuries. Find ways to reduce your expenses. Work out your monthly budget based on your income and liabilities and stick religiously to it. There is no other more effective way than this.
Pay More
Pay as much into your credit card debt as possible. Make it your goal to pay in full each month. Never settle for paying the minimum amount payable unless you are in dire straits and that is also due to an unexpected emergency. Don’t even think of skipping payment because not only will that make you pay more the next month, you risk your credit profile being blacklisted which may affect your whole creditworthiness.
Consolidate
Try to minimise the number of credit cards that you have. This will enable you to monitor your expenses and payment due dates better and lessen the risk of your missing a payment. Take out a personal loan to pay off all your existing credit card debts. In most cases, the interest rates for personal loans are lesser than the prevailing credit card interest rates. Never ever seek loans from unlicensed money lenders.
Counselling
If you are really unable to manage your credit card debts, you should seek professional help from financial planners or even from the Credit Counselling and Debt Management Agency which was set up by Bank Negara Malaysia.
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