Simple steps towards better credit card management

Q . I currently have a large credit card debt and I am unsure how best to manage this, can you please advise? A . I have outlined below some key tips to help you better manage your debt.

CHANGE YOUR SPENDING HABITS

This is the first step as there is little point in dealing with the debt now, only to build it up again. Credit card debt is often the result of people living a lifestyle that they cannot afford. Take out your credit card statements for the last six months and identify where and on what you have been spending money. It is advisable to put together a budget of your incoming and outgoing money and look at reducing overall expenses.

DON'T STICK WITH MINIMUM REPAYMENTS

The longer you have this debt the more it will cost in interest and you should aim to repay as much each month. Drawing up a budget, as mentioned above, will help you see where you can cut expenses elsewhere in order to increase your monthly repayments.

MAKE THE SWITCH

You could look at moving the debt to a credit card with a lower rate of interest, or an interest-free period, to help you pay off what you owe. If you do manage to go down this route, make sure you cancel your old account so that you do not pay stamp duty on two cards and try to pay off the debt during the low interest or interest free period.

TAKE OUT A PERSONAL LOAN

As credit card debt is so expensive, it may be worth your while taking out a personal loan with a lower interest rate (APR) to pay off the credit card. This is basically replacing one debt with another less expensive debt. The National Consumer Agency is a good place to turn as it has a facility on its website for comparing personal loans.

TALK TO YOUR CREDIT CARD PROVIDER

Ask if they will reduce the interest rate on your card, or stop applying interest or fees. You will need to be able to demonstrate that you cannot pay the full amount and support this with a budget showing your incoming and outgoing money. If you put forward a good case, they may consider writing off some of the debt.

CUT UP THE CREDIT CARD

This is the easiest way to ensure that you do not build up debts again. If you really need a credit card for emergencies, keep it in an inconvenient yet safe place so that you are not tempted to use it for everyday items or on impulse.

Use a debit card or use cash – handing over hardearned cash makes you think carefully about a purchase.

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