Your favourite clothing brand goes on sale. A week-long overseas vacation. That latest gadget that you just have to own. Another party to celebrate another weekend. And how do we pay for all of these? With our credit cards, of course!
Credit cards are the best way to spend money we don’t have with the least amount of thought. Keep spending more than what you earn, however, and before long you would have racked up a sizeable credit card debt to your bank(s).
If you’re stuck in a sticky credit card debt situation, don’t panic. The first thing you ought to do of course is immediately look into and change your spending habits. Resist the urge to buy. Sell off everything you don’t need. Cook at home instead of eating out. You know the drill. In short, ensure that your income exceeds your expenditure.
Besides this basic, necessary step, there are also other measures you can take to offload your debt burden.
Pay beyond the minimum amount on time
More often than not, the real killer in any credit card debt is the interest. When you only meet the minimum monthly payment on your cards, you’re barely providing enough to repay the interest, let alone the principal amount. Fail to pay anything at all on your bill and the interest compounds at an alarming rate.
As far as you can, try to pay more than the bare minimum at the end of every month. Even by a little. You’ll be surprised at how far it will go to reduce your debt in the long run.
Transfer your balance to a new card
As you no doubt would have found out by now, the interest rates on credit cards are very high. Much of what you owe on your current credit card is made up of interest. Therefore, a balance transfer is definitely one of the ways that you can reduce your debt.
Balance transfers allow you to transfer over your balance on your existing cards to a new one with a lower interest rate. Some cards even offer 0% interest, usually over a short contract term. Performing a balance transfer could save you a whole lot of ringgit. Until you’ve paid off the debt just be sure to never swipe your new credit card unless absolutely necessary.
Get a personal loan
Besides a balance transfer, you could also apply for a personal loan to pay off your credit card debts. Sure, you’ll still owe a bank money, but at least all of your debts will be consolidated in one place. And the interest could be lower than that of your credit cards, too. Work out a realistic repayment scheme with your bank officer while applying, and be sure to keep up with it. Defaulting will only take you back to square one.
Talk to your bank
Believe it or not, your bank is actually there to help you should find yourself unable to cope with your credit card bills. Give them a call or pay them a visit, and they’ll be very likely to reduce your interest rate or grant you a repayment extension. Just don’t wait till the debt collectors come knocking on your door, because that means that your bank has already given up on you.
Consult the Credit Counselling and Debt Management Agency (AKPK)
If you’re truly in too deep and all other measures won’t work anymore, it’s best to speak to someone from the AKPK before you consider filing for bankruptcy. Although it does not provide loans or financing, its counsellors will help you to work out a tailored debt repayment plan you can afford upon discussing your financial situation with your bank. They will also give you advice on prudent financial management so that you won’t fall into another debt trap. Best of all, their services are free!
As you can see, there are quite a few methods to making your way to safer grounds if you’re knee deep in credit card debt. Of course, the RinggitPlus team hopes that you’ll never have to use any of them at all. Do come back to our site often to equip yourself with the best credit card deals and other sound financial advice.
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