The challenge with card debt is the cost of interest. Compounding rates affect it in such a way that when you take longer to repay it, you eventually will pay more to your moneylender.

Additionally, interest payments will prevent you from attaining financial stability in the future. It then means that the longer you delay settling your debt, the worse-off you will be in future. Therefore, repaying interest-bearing card debt needs to be your highest priority.

When you hold card balances that will exceed 6 months to repay, these step-by-step tips will dependably help you clear the debts as fast as possible.

Lower Your Interest Rates

Balance Transfers allow you to move existing card debts onto some other credit facility, normally with a set 0% interest and payment period. It will offer you the chance to settle the existing balance at 0 per cent interest, in effect saving you some cash on interest payments.

But, remember that the Balance Transfer interests revert back to the current rate (frequently equal to the card’s base rate) after the interest-free period ends. Also, you will pay your moneylender an admin cost upfront.

Besides, you only can get a Balance Transfer equals to a proportion of the existing credit limit, which means you might not qualify for it when you exhaust your credit limits.

Rank Debts According to Interests

Search through all your card bills for three information details, that you can put in a simple spreadsheet.

For every source of debt, list: the owed amount, the rates, and minimum monthly repayment required. Then, list the debts based on the interest charged. When you hold several debts with similar interests, rank the one with a lower amount owed.

Remember that when you get a cash advance, interest on the amount may be higher compared to the base card rate. Hence, when one of your credit cards holds a significant balance which is mostly comprised of cash advances, place that on top of the list.

Likewise go ahead and calculate the total amount you owe as personal loan, across all the debts.

Determine the amount You Can Pay Monthly

Work out the amount you can pay reliably towards your credit each month. Prepare a simple budget where you can examine your wages against your expenditure. Be very elaborate as you do this, as the aim is to get a clear picture of where your funds go. Add up all the bills, and include any installment payments too. For credit cards, sum up the minimum payment amount for each then add it to the final expenses count.

Limit Access to Your Personal Loan Facilities

Other than mortgages, the most popular source of personal loans for Singaporeans are the cash advance on credit cards. For people dealing with debt, this can be both good news and bad news. However, when utilized responsibly, the credit cards are rewarding and convenient. But, since they are easy to use, you might end up depending on them beyond the safe point to do so.

Luckily, it is completely possible to decide to temporarily stop utilizing credit cards, thereby will avoid taking on additional debt.

Pay Down Existing Debt

Scrutinize your card balances then highlight the cards that attract the highest rate of interest. That is your Targeted Debt, and it is the one you will first go after. Every month, pay the monthly minimum payment on your card, plus monthly loan repayment towards the Target Debt. On the rest of your cards, only pay the minimum amount for now.

Of importance is that you settle the minimum payments for each month on all the existing outstanding credit cards, failure of which will cost you late fees of up to S$80 a month. Maintain this repayment schedule until the Target Debt has been cleared in full.

For the DCP, you only have a single Target Debt – the set monthly repayment can be used to repay your cash advance personal loan. Make a point to remit the payments on time, or risk incurring late payment fees.

Celebrate Progress Made

In using this method, you will be able to break down your existing debt into smaller manageable chunks that you can then pay off one after the other.

One crucial key to success will be to celebrate the progress you are making along the way. Doing this will provide you with an essential psychological boost which serves to reaffirm your capability to get in charge of your personal loan debts.

Keep Going

Soon after you have repaid off the first Target Debt, the monthly Debt repayment tends to increase. The reason for this being since you do not have to repay a minimum payment for each month on the credit card you just cleared.

Therefore, you might consider adding the extra cash towards Monthly Debt Payments, the use it for paying off the second debt that has next highest rates. Soon after you settle the second debt source, increase again the Monthly Debt Payment, and pay towards the next credit on your debt’s list.

To conclude…

If haphazard spending is how you incurred all that card debt to start with, then it is proper that you follow a steady and careful repayment plan to help you repay your current debts.

In order to manage your credit card debts, you will need to have gained some clarity regarding your position, formulating an action plan, and thereafter executing your set plan, one step after another. You could be feeling rather helpless concerning your huge debts. However, formulating an action plan to handle them is credibly empowering.

When you deal with those debts with the highest interest and highest balance first, the progress you make will increase with each credit card debt you clear.

Also since you are spending funds already assigned to card bills, you will not need to be worried about generating additional money. This will not only make the method reliable for clearing off debt, it will also allow you to start on other financial goals, like growing an emergency fund, as you settle your debt.