If you have credit or store
cards:
- Try to get a 0% balance transfer, and move your
most expensive cards across. Don't use the new
card for anything other than the 0% balance transfer
because card companies usually allocate your repayments to
the cheapest interest rate items first, leaving the more
expensive purchase items to rack up interest. Store
cards are usually the worst for high interest
rates. Balance transfers are the cheapest form of
borrowing at the present time, so make the most of them
whilst they last.
- If you cannot get a 0% balance transfer to a new card,
contact your existing card companies and see if they will
give you a deal to transfer in balances from your other
cards. Or just ask for a better interest rate deal, citing
that you have been offered a better deal elsewhere.
- If you cannot get a 0% balance transfer or a cheaper
rate card than your own, and your own card provider won't
reduce your interest rate, you need to go back to your
budget and cut even deeper. You need to make further
reductions in spending so that increased debt repayments
coupled with a reducing amount of total debt will improve
your credit rating.
- Ensure that all your credit and store cards have the
minimum amount paid each month by direct debit. This is a
disciplined approach that ensures that you will not
accidentally pay late or miss a payment.
- Starting with the most expensive card, make at least
one additional payment each month using the bank payment
slip at the bottom of your monthly card statement.
- And, if possible throw as much additional money at it
in the course of each month as you can reasonably afford,
until the balance is cleared. Many card
companies allow you to make telephoned payments by
bank debit card. Once the most expensive card is paid off,
follow this step again with the next most expensive card
until that is cleared, and so on. Always concentrate
additional payments on the card with the highest interest
rate. You need to cut down your interest charges so that
more of your money is clearing debt.. Don't make any
additional payments on other debts until this most
expensive card is paid off
- Once you have cleared a card this way, don't start
using it again without being able to clear the balance at
the month end when your statement arrives, and certainly
not before the rest of your cards are cleared. If you think
about it, you would be best advised not to use your higher
interest rate cards at all.
- If you have bank overdraft (at normal interest rates)
but are not using anything like your limit, and if some of
your card interest rates are exceptionally high, it may
make sense to reduce or pay off the card/s using your
overdraft. You will still have the same amount of debt but
at a lower interest rate.
Do it Yourself
Get Out of Debt Plans
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