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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