September 10, 2013
Smart Strategies to Get Rid of the Card Debt
The best way to use a credit card and still keep on enjoying all the benefits offered by the service provider is to keep paying all the dues of the card on monthly basis. This way one can keep oneself debt free, have a great credit rating which ultimately turns into getting lower interest rates but still accumulating all the reward points along with free miles to enjoy free travel anywhere across the world and also keep getting free goodies against the accumulated reward points.
Something not practised
Unfortunately, as we all know, the above is seldom practised because the lure of getting away by just paying the minimum balance payable reflecting in the monthly credit card statement is too tempting to resist. In spite of knowing the fact that it is a honey trap which makes the card user pay almost seventy percent extra, on the outstanding amount,as interest by opting to pay the minimum monthly payment, most of the people fall for it. There may be genuine reasons for piling up all this debt, but a resolve to get out of this mess and a few smart steps can help gets rid of the debt trap.
Start with one card: If there are multiple cards being used by a person, then the target should be clear the complete debt of one card at a time, depending on what one is looking at, as an immediate achievement. In case the need is to decrease the interest pay out, target the card with the highest interest rate first. If one wishes to increase the credit rating, the card with the maximum utilization ratio should be the target. In all other cases, the balance of the card with the minimum balance should be cleared first.
Try getting lower interest rate: There is a lot of competition in the market as on date and one keeps getting offers of balance transfers on lucrative terms and on better interest rates. If the credit rating of the card holder is good, just informing service provider representative regarding these offers may help getting a better interest rate from the existing service provider, because no one wants to lose a good customer with a good credit rating.
Opt for balance transfer if necessary: This is one decision which one should take only if the existing company is not ready to accommodate the interest rates and the competitor is offering a substantially power rates and a long period of low interest or interest free regime. Also one should make the best use of this period by paying of complete old debt during this time.
Get loan from other sources: There are numerous lenders who could lend at much lower rates than the credit cards and one can swipe the loan with help from them, if the credit rating of the card holder is good.
Pay twice the minimum balance: It would be a big help in getting rid of the debt in a very short span of time as compared to the regular minimum balance payments.
The above simple steps can help one in getting out of the debt trap very fast.
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