Here Is What You Need To Do If You Are Heavily In Debt
When you have loads of bills in your plate that you have to take note every month, there will be a chance that you may not notice other bills which can blow up without you noticing it.
Although Singapore is noted as one of the best countries with high financial assets per capita in the ASEAN region, it is also noted as the country with the highest debt per capita. Loans from the country can rake up to an average of S$53,203 per citizen.
Unfortunately, debts can be quite hard to shake off, especially credit card balances. The more the credit card balance is high, the higher the interest charges would be raked and the more we are placed under debt. If you do not do something, you may find yourself unable to get on your monthly payments.
Revolving Credit/ Debt
When you go out and you need to pay something that you can’t afford at the moment, you must remember that you are basically putting yourself in debt: a revolving debt.
When you are in revolving debt, you will be charged extra if you are unable to pay your balance on time by the bank in exchange for letting you borrow money.
After you use your card, it is important that you do not just pay it off with the minimum monthly fee and some extra. If you only pay the minimum fee, you will have to contend to a higher interest fee in the following month and you are basically paying more for what you originally borrowed.
If you are wise enough when you use your card, a revolving debt can be advantageous. However, since revolving debts tend to be open-ended, you put yourself at risk in paying higher interest charges.
Revolving credit can also play a part in your credit rating and if you are not careful, it may even play a big role as to why you cannot get services like personal loans when you need more funds.
Revolving debt can affect your credit rating based on the percentage of how much you owe your bank through your card. Usually, your credit rating goes down if your credit card use is more than 30% of your available credit.
What Should You Do to Stop Revolving Debt: Debt Consolidation
If you want to save yourself from this nightmare brought by revolving debt, it is ideal you immediately enact measures to make it manageable to make it easier to pay.
The best way you can handle a revolving debt is by requesting from a moneylender or a bank for a personal loan which can consolidate your debt with low interest.
While the idea can sound weird at first since you are borrowing money from a different group to pay off your current debts, doing this method can actually save you a lot from further debt.
When you apply for a personal loan from a moneylender, their interest rates are actually quite smaller than credit cards. They are also stuck at one specific interest rate which does not increase every month even if you are late. If you are late with your repayments, the interest rate is still the standard interest rate prescribed by law.
Personal loans are also easier to pay off rather than credit cards. When you pay your credit cards, it is crucial you pay it immediately so you don’t have to pay more for what you used because of the interest rate. On the other hand, personal loans can be paid in 3 to 5 years depending on how much you borrowed and what you agreed upon with the moneylender.
Personal loans, especially debt consolidation, also enables you to consolidate all your debts with high interest in one big loan that comes with a small interest rate. Since they have one interest rate, you don’t have to worry about high interest fees every month.
What to Remember When Considering Debt Consolidation
However, if you do consider personal loans for debt consolidation, you need to make sure of the following factors.
First of all, the personal loan you are looking at should have a lower interest rate than your current debts. It must also have a low to no processing fees for debt consolidation since this will reduce the money you need to spend overall.
When your debts are consolidated, your payment plan must match your current situation and you must pay on time. Even if moneylenders are open to discussing their payment terms if you find yourself unable to pay, you can still get into problems if you repeat it consistently. You may even have to pay extra charges because of repayments.
You also need to ensure your moneylender is properly licensed to prevent further problems to occur.
When you successfully consolidated your debts through a personal loan, your monthly payment is already fixed depending on its total and your payment period. As a result, you can manage your budget more seamlessly and pay only one set amount every month to cover your dues.
Since personal loans come with lower interest rates, your interest fees are also much lower. This will ensure that you do not need to worry about damaging your credit score too much and pay off the debt faster.
When you are in credit card debt and don’t see yourself getting out of it soon, do not immediately be disheartened. You can still get them all paid if you enact measures to make it more manageable.
If you use a personal loan to pay off your debts, it can take off a lot of pressure from your shoulders to pay a huge amount of money every month. Since it can cover all your debts, you can easily set aside the set amount of your loans every month to pay your loan dues and use the rest of the money for your other expenses.
So, take action today and save yourself from revolving debt madness! We wish you good luck and we hope this article helps you out!