If you’re stuck dealing with credit card debt then the first thing you need to realise is these are not special circumstances, you’re not alone plenty of South African’s have misused their credit cards or had to lean on them during tough economic times. The National Credit Regulator claims that 58% of South African consumers are struggling to pay off their credit cards.
But it’s not all doom and gloom, there are ways to turn things around and with a good payoff plan. There are ways you can be debt-free sooner than you think without hurting your credit. So let’s dive in!
Smart Strategies to Eliminate Your Credit Card Debt
1. Target just one card first
If you’re carrying balances on multiple cards, then it’s going to be a long process to wipe out those debts. The first thing you need to do is decide whether you want to pay off one card at a time or consolidate all your debt into one card and paying the interest on one lump sum. This will also depend on the credit limit on the card you want to use to consolidate.
If you cannot consolidate your credit card debt look at the card that has the highest interest payback rate and starts paying off that one and move down the list.
2. Ask your creditors for lower interest rates.
Sometimes a simple phone call to the credit issuer is all it takes to get a reduced rate. You could get a percentage point or two shaved off, which can add up to hundreds of Rands saved annually.
Tip: Shop around and f you’ve been offered a lower rate by a competitor, tell the customer-service rep in order to put pressure on them to lower your rate
3. Transfer your balance (cautiously).
It can be tempting to move a balance from a card with a high-interest rate to a card with a substantially lower one and it can potentially be a smart move that can save hundreds of Rands a year. But a word of warning to you.
You should transfer a balance only if you’re committed to paying off the debt within an introductory low-interest-rate window (which typically lasts 12 to 18 months after the first billing cycle closes) and to make monthly payments on time. If not, your rate could skyrocket, possibly ending up higher than the one you just got rid of.
4. Use a peer-to-peer lender
5. If you’re really strapped, make two minimum payments each month
Card issuers typically charge interest on a daily basis. Which translates to the sooner you make a payment, the faster your average daily balance is reduced, which translates into fewer rands in interest that you ultimately pay.
If you’re on a tight budget, go ahead and pay the minimum due each month, then try to make the same payment again two weeks later. Keep making a payment of the initial minimum-due amount twice a month until your debt is paid off.
6. Get a part-time job
This is a simple one if your current job cannot meet your financial requirements its time to find ways to add additional income streams. A part-time job or working from home doing micro jobs can earn you some extra income that you can dedicate to clearing your credit card debt.
7. Liquidate investments
If you have any investments, you may want to sell them and repay your credit card balances. You want to be careful which ones you sell, though, because there can be some pretty nasty tax consequences when liquidating your assets so make sure you evaluate your options before looking at this one or you make a bad choice and lose more money than you need to pay off.
8. Stop the blame game
Stop blaming others, the economy, the economic system, political system, their boss, or anyone or anything other than yourself. The only justifiable and legitimate excuse is those unfortunate individuals who find themselves in the midst of a horrible health scare and rack up massive debts to survive. Unless that’s you, there’s something you need to hear: Get. Over. It.
You are not a bad person. You are not a stupid person. You just made some foolish choices. It had nothing to do with your income. It had nothing to do with your family. Every time you swiped your credit cards, you made a willing decision to borrow what you did not have.
The very first month the statement came and you couldn’t pay off the entire balance in full, you had exceeded your resources. That’s the moment you got in trouble.
9. Stop segregating your monthly income mentally
Instead of thinking in terms of “my bills money” or “my grocery money” think of it as a dynamic pile of money that is available to you. If you are in credit card debt and paying massive interest on your balances, take every extra penny you can and pay down the debt.
Cut down on your areas you can easily do so, stop subscriptions, reduce the number of groceries or the number of premium-priced groceries you buy. Look at ways to save on your normal monthly expenses and divert that into reducing your credit card balance.
10. Cut up your credit card
What good does it do to plug holes in your ship in you are constantly drilling new ones in the side? If you can’t resist using your card it may be time to get rid of it all together.
11. File bankruptcy
In the world of personal finance, there is one the one “big red button” which, is bankruptcy. In many cases, it is possible to completely obliterate your credit card debt by filing for bankruptcy or at the very least have a court-ordered restructuring that gives you breathing room to repay your balances and get your life in order.
12. Debt Review
Using debt review it offers consumers the opportunity to restructure their debt and make smaller monthly payments, have a manageable repayment period and have more money in their pockets at the end of the month.
Manage your debt effectively
If you’re feeling overwhelmed by your current financial situation, feel free to contact us. To Speak to one our consultants about debt review contact us here.
Source: business tech