If you have balance on different cards, you need to take some serious steps to pay them off. Credit card loan keeps piling up if not paid in full. Therefore, if you find yourself in such mess, you need to take a few cautionary steps.
Following, we are discussing a few tips to help you pay off these loans earlier than you originally planned.
Every Case is Unique
When you want to Consolidate Debt, you better give it a second thought and assure it’s the right thing. The following questions will help you get a straight answer:
- Evaluate your total debt. Get all your credit statements together, and learn how much debt you actually own
- How much can you afford to pay your credit card company every month? You need to focus on paying off your debt asap. Therefore, you need to pinpoint how much you can afford to payback each month
- What’s the time frame for your Low APR? Long APR allows more time to pay off before the low rates climb up. Therefore you should use this to your advantage
Remember these factors as they help you learn how much you can actually save on interest rate while you can pay back your debt in 0% APR. You need to practice caution and see a great difference between low and high APR.
Balance Transfer and Credit
Consolidation and thelow leveraging amount can help improve credit score. In order to achieve this, you need to keep a few things in mind. Credit utilization evaluates 30 percent of your credit score. Therefore you need to keep your credit card balance low.
When you consolidate card, maintain a low credit card utilization ratio, but remember your overall rate will remain the same. Lower interest rate during introductory period means you pay more towards the end of balance every month. This lowers your credit utilization quickly.
Don’t close your old accounts after you have consolidated all your debts. The age of your account makes up 15% of the credit score. Therefore, you might regret closing your old accounts. You need to make your credit history as old as possible.
So don’t close your old accounts, but restrain yourself from using your old cards to avoid piling up more debt.
0% APR Balance Transfers
0% Introductory APR is very effective to pay off your debt instantly. It saves your money as you don’t have to pay a high-interest rate. You will need to pay off balance transfer fee which will charge 2-5% of the total balance.
Even with upfront charges, you will enjoy substance savings in the long run. You need to consider it when deciding the credit card consolidation is right for you or not.
Best Interest at Heart
If you want outside help, make sure you consider all of your options. You need to try, and compare different credit counselors before you finalize one. Though they may appear the same, not every credit counselor has your best interest at heart.
Therefore, you need to discuss details about your situation and different package with a few of them before finalizing one.