Credit Card Debt Tips
Are you running up a huge debt on your present card, if not you previously have an agreed low level of interest to pay, the probability are a heavy sum of the money you pay each month will go towards the interest on your debt, rather than the actual amount you owe. Big spenders on credit cards mean big money for lenders and most are keen to take on new customers with big debts as it means they can make large amounts of money on the interest. To entice customers away from their current lenders they invariably offer attractive deals such as 0% APR on balance transfers for a fixed time period.
Beware Hidden Fees
Other common way lenders try to squeeze money out of potential 'rate tarts' is through implementing charges for switching. Many lenders charge a standard fee of £50 for transferring (added on to your new balance), but some charged uncapped fees of two or even three per-cent. Depending on how much you owe on your cards the uncapped fees can prove costly, for example, at the highest rate of 3%, transferring a balance of £5,000 would cost a whopping £150. Check the switching fees a lender charges before switching.
3). Destroy Unwanted Credit Cards
As any self-confessed rate tart will be able to tell you, taking advantage of low interest rates and balance transfers can be a very effective way to pay off credit card debt, however, they are only profitable if you destroy your old credit cards, too. If you regularly change credit cards to take advantage of 0% APR, over the course of a year or two you could quite easily end up with three or more credit cards. While you may have paid off the debt on some of these cards through balance transfers, if a credit card with an available credit limit is in your pocket or purse, the temptation for many people is to use it, racking up debt on all cards. A simple tip: once you get a new credit card destroy any others you may have and notify the lender that you wish to close the account.
Pay-off as much as you can each month
Interest rates on credit cards are astronomically high compared to most other rates for borrowing; therefore you should try as hard as possible to pay-off as much as you can afford on your cards each month. If you have credit card debts, but are also saving a small amount each month, you would be better off in the long-run putting that money towards paying off your credit card debt before beginning to save. If you can afford it, even by an extra £10 or £20 each month, always pay more than the minimum monthly repayment asked for.
Research by Moneysupermarket.com found that by only paying the minimum monthly repayment on a credit card each month you could quite easily prolong your debt by more than a decade. The company claim that on a typical credit card balance of £2,200 with a standard APR of 13.9%, it would take 26 years to pay off the debt in full if the required minimum payment of 2% was paid each month. What's more, over that same period, a whopping £2,463 extra would be paid back in interest - more than the initial amount owed.
Alternatives to Credit Cards: Payday Loans
Many people first get credit cards when they need to make a one-off purchase - such as a special item purchase, holiday or emergency spend - often with the intention of only using it once. However, once they get the card - and see the readily available spending limits - credit cards can quickly become an all too familiar part of everyday life.
Article Source : Credit-Card-Debt---5-Top-Tips
