Many people own credit cards, and are extremely careful with them – and rightly so. If used incorrectly or excessively, it can result in a whole host of problems, not least of which is financial debt. Your New Year’s Resolution was to pay off that sum you owe, so it’s time to be more responsible!
Even if you only owe a debt of say, £2000, you could easily end up shelling out over twice that amount in interest. And your worries don’t end there. Debt can poorly affect your credit score, which can impact your mortgage application or even phone contract. Then there’s the stress of not having enough money to pay for other things, and it can all pile up.
Luckily, there are a number of things you can do. Simply keeping up with consistent monthly payments is your best bet, but that’s not always easy. If you’re smart, you can reduce or shift that debt which results in a cheaper time for you on the whole. Here are a number of top tips for reducing credit card debt in 2016.
Increase your monthly payments
Sort of an obvious answer here, but it’s a viable one. Do you need that crate of beer? Do you need that chocolate? Just paying an extra £20 or £30 a month can lower your debt in the long run. You can do this by making two minimum payments a month, instead of just the one. Over time, it really adds up.
Plan a monthly budget
It’s such a simple thing to do, yet so many people don’t. Knowing precisely just how much money you have going in and out is key, so you can identify areas to cut back. Organize your monthly income and expenses on an Excel spreadsheet for a handy all-in-one solution.
This can let you see where you can cut back. Can you reduce food costs, or luxury items? Can you get that electricity bill down? Maybe start unplugging appliances? Every penny you save will make you feel just a little bit better.
Transfer your balance, with care
Acting as a sort of get out of jail free card (only, you know, not free) balance transfers are very useful. As the name implies, it allows you to transfer that credit card debt to another company. This is usually to switch to a card with a lower interest rate, reducing your overall payment.
This low-interest rate will typically only be for a short introductory period, so you’ll have to move fast. You can find various balance transfer offers over here, to make sure you’re not missing out! Again, be sure to carefully read the terms and conditions. Banks like to make money too you know, so don’t come across as desperate.
Pay in cash, and hide the plastic
Whenever you have your credit card on you, temptation rears its head. It can lead to your financial downfall quite quickly, so eliminate that temptation! Leave your cards at home, or ask a family member to safely hide them. Take cash out to the shops with you to give yourself just the one option.