Most people fear debts.
It will drag you for a long time with sleepless nights. However, some people fall into spiraling debts for various personal reasons.
You could have used your credit card for an actual emergency need, but whatever the reason, failing to pay your credit card is an easy way to slip into snowballing debt. This is especially the case if you maxed out your credit limits.
How do you deal with this dilemma?
Ignoring your bills and the bank’s calls will never be part of the list. Here are five best ways to finally get out of your credit card debt.
- Pay in full
Of course, the best way to settle any debt is to pay the outstanding balance in full. Some people mistake credit cards as free cash. They keep on swiping until the credit limit. Then they will just pay the minimum required payment.
Take note that while banks boast of their low required payments per due dates, this is only to give you an assurance that you will not be charged with late payment fee.
Be reminded that even if you do not have any late payment fee, as long as you don’t settle the balance you will still be charged with high-interest rates. Pay the due amount to avoid being charged with interests.
This option is best if your monthly income is still enough to pay off the debt.
- Minimum repayment
Choose the lesser evil.
As said above, it is best to settle the whole amount in full as early as possible. On the other hand, if you do not enough cash to settle the bill, pay at least the minimum amount.
Making the minimum amount helps you avoid the late payment fee but the interest rate will still apply. Most credit cards have a minimum repayment of $50 or 3% of the outstanding loan. It is best to ask the bank about it.
While the minimum repayment may be helpful, this is only a short-term solution. Do not make this a habit or you’ll be in very deep debt soon.
Also, if you can only pat the minimum amount of your credit card balance, it is best not to use the card. You are already having problems paying your bill, why would you add more.
Refrain from using your credit card while still repaying the balance.
- Personal loan
There are personal loans which have lower interest rate than the credit cards. Use the personal loan to pay the credit card debt. These personal loans can be acquired from private money lenders.
Personal loans are usually multi-purpose. This means that you can use it from purchasing stuff to paying your other debts.
Personal loans have fixed repayments but you can settle it on an earlier date. Check if there is a prepayment penalty to know if you can settle the loan earlier without extra charges.
- Debt Consolidation
If you have multiple credit card debts, it is better to have a debt consolidation plan. Unlike the balance transfer which will require you to get a new credit card, a debt consolidation plan can be done in other ways.
Some banks offer debt consolidation even if you do not have a new credit card but you must have a savings account. Money lenders also offer debt consolidation.
This means that your bank or money lender will pay off your multiple credit card debts. You will just keep track of one loan with a single interest rate.
This option is best used if your credit card debts are already 12 times your monthly income.
- 0% per annum interest balance transfer
The balance transfer is used to pay your credit card debt with a low or zero rate interest loan. This is offered by most banks in Singapore.
If you have uncontrollable credit card debt in a bank, you can apply for a credit card in another bank. The new credit card will be used to pay your old credit card debts.
Balance transfers usually have zero interest rate for the first six months. This will give you some breathing time to find more ways to pay for the debt. Do not use the new credit card until you settled your debt to avoid making new debts. Balance transfer process might take three weeks or more.
What to do after settling your credit card debts?
If you have a couple of credit card debts, it is best to form a plan on how to settle them. And once you have paid them off up to the single Singaporean dollar, you must be cautious not to be in that situation again.
If you need to make an important purchase or you got into an emergency situation, it is best to just get a personal loan. Personal loans have lower interest rates which are capped at 4%.
Avoid credit card debts! Whenever you need a quick cash loan, get it only from Cash Mart.
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