Are You Credit Card Savvy?
Following are three tips on reducing your credit card debt and getting credit card savvy.
1. The ‘most expensive’ trap. Your credit card could be made up from various types of debt. Purchases, cash withdrawals and any transferred balances. Each one may have different levels of interest applied. So many people may think they can use the new card especially falling into the trap of ‘interest at 0% on transfers’ this doesn’t mean on all money being used is at 0%. Most of the credit card lenders are actually taking your payment and applying the interest at the highest levels and paying the transferred monies off firstly, sop any money at higher rates is not being paid off. Make sure you avoid this and read the small print as they say; the devil is in the detail. 0% cards are still a good idea, just do your homework.
2. Watch out for ‘direct debit’ trap. You should always look to set up a direct debit for the account, which will take the minimum payment in many cases. But if you desire to pay it off as soon as you can, set the Direct Debit to the minimum amount, and set up reminders for yourself each month to pay off extra, either by standing order or check. As long as the debt is reducing and you know you can afford the extra payments, you should see the debt slowing reducing.
3. The ‘minimum repayment’ traps. As discussed, the worst thing is to pay the minimum each month, especially if there is a fair amount of credit taken. It could take years and years to pay off. Just a few pounds extra each month could make all the difference to you being credit card free much earlier.
For more information, visit debtcounsellors.co.uk