Taking out further loans to consolidate debts isn’t always a good idea, but balance transfer credit card deals can be an effective way of getting your finances under control.
Debt is a serious problem for many people. Struggling to balance budget is all too common, and if bills are left go unpaid and debts begin to spiral out of control.
But there are few steps to stop small debts becoming a big problem. The sooner you act the better and the easier it will be to solve your problems.
Using a balance transfer card or debt consolidation loan is a good way to reduce interest and make repayments more manageable, but it can cost more in the long term, so make sure you understand the costs of what you’re getting into.
Organise your bills in one place
Keeping your bills in one file or drawer is an effective way of organising everything you need to pay each month. Open each bill when it arrives, and file it away ready to make a payment when you have the money.
This simple process means you’ll never miss a payment and incur a penalty fee.
Late payments can impact your credit rating and make it harder to get loans and credit in the future. It can also help to make a list of all the bills you expect to receive each month and check them off as you deal with them.
Decide on a payment date
The best date to pay your bills will usually be just after you get paid or receive benefits or other income. If you leave it until the end of the month, you may find you’ve spent the money on other things.
As long as you know you’ll have enough money left for food and general living expenses, settle your bills before you spend the money and have nothing left.
Go to your file or drawer on the day you decide as your bill payment date each month and review the bills you need to deal with. Depending on the number and types of bills you have, you may need to have two payment dates each month.
Pay more than the minimum if you can
Rent, mortgage and utility bills should be your first priority each month. credit cards and other loans are less important, but still need to be paid. Paying the minimum to your credit cards means that interest will accumulate, and it could take years to clear your balances.
It’s a good idea to set up regular payments to credit cards by direct debit or standing order, and this means you’ll never miss a payment. Paying additional amounts to credit cards every month can save you thousands of pounds in interest.
Look at balance transfer credit card deals
Once you know what debts and loans you owe and set up a system to pay them every month, it’s time to look at ways of improving your finances.
Balance transfer credit card deals can be used to get interest free credit for up to eighteen months. Switching other balances to a new card could save you over a thousand pounds in interest payments.
Look for balance transfer credit card deals with the longest interest free period possible, and don’t base your decision on loyalty points or other incentives.
- How to pay off credit card debt – a step-by-step approach to pay back credit card debt
- Credit card consolidation – how to combine your credit card debt into one low or 0% interest rate credit card
- How to spring-clean your finances – Your personal finances are no different to your home, garden or garage – they need a spring clean from time to time.