Useful tips to tackle credit card debt

If you have a number of high interest credit card debts it is important to tackle them as early on as possible, as otherwise you could end up paying a fortune in interest as well as increasing the risk of missed and late repayments that could adversely affect your credit. Credit cards are very useful financial tools, but one of the main problems with these cards is that they can lead to high debt levels and spending can quickly get out of control. It is all too easy to accrue high levels of debt on credit cards, and you could then spend years making repayments on your balance and clearing very little of it because of the high interest charges involved.

One thing to bear in mind when it comes to tacking credit card debt is that you should always aim to pay off as much of your debt as possible in order to reduce the amount of interest that you have to pay and decrease the time over which you have to repay your debt. Wherever possible you should pay off your credit card balance in full, as you can then avoid having to pay interest. However, even if you cannot make the repayment in full each month you should always pay more than the minimum amount requested, otherwise it could take you decades to repay the debt and you could pay an absolute fortune in interest charges.

If you have a number of credit cards with outstanding balance and high interest rates then it is advisable to find a way to tackle this debt in order to reduce the amount of interest that you pay, ease financial management, and decrease the amount of time that you will be in debt for. One of the most effective ways to do this if you cannot repay your credit card balances in full is to consolidate the various credit card debts that you have to provide one more manageable repayment and to reduce the interest that you pay. This could help to reduce the amount of time over which you are repaying your debt, and could also help to reduce the risk of missed or late repayments.

There are a number of options available to those that wish to consolidate their costly, higher interest credit card debts to increase affordability and manageability. This included:

Unsecured consolidation loan

An unsecured consolidation loan is an effective way to deal with smaller, high interest debts such as credit cards and store cards. You can usually borrow up to £25,000 on these unsecured loans, although the exact amount that you would qualify to borrow would depend on your circumstances and factors such as your income, credit rating, employment status, etc. You can use your consolidation loan to pay off your higher interest credit and store cards, and then enjoy fixed monthly repayments for a set period of time after which your debt will be cleared. Make sure that you compare a range of unsecured debt consolidation loans, and remember that you will normally need to have decent credit to benefit from one of these loans.

Secured consolidation loans

Consolidation loans are also available on a secured basis, and this is where they are secured against the equity in the home so you will need to be a homeowner in order to take out one of these loans. The borrowing power with secured consolidation loans is higher than with unsecured, although the amount you can borrow will be based on your equity levels amongst other factors. With this increased borrowing power you could pay off your credit and store cards, and also consolidate other debts that you may have such as personal loans, catalogues, and any other debts that you wish to get rid of.

0% balance transfer credit card

Although it may seem odd to consolidate your credit card debts with another credit card using a 0% balance transfer card can prove to be an effective solution. This is where you transfer the balance from your existing credit cards onto a 0% balance transfer credit card that offers a specified period of interest free credit. You can transfer as many balances as you like up to the credit limit on your new card, and you will have to repay the combined balance in full within the interest free period in order to benefit from 0% interest. You should remember that there is usually a transfer fee of between 2-3% of the total amount being transferred onto the card, so do take this into account.

Life of balance transfer card

If you do not feel that you can repay your balance within the interest free periods offered on 0% balance transfer cards you could look at a life of balance transfer card. These cards allow you to transfer balances from existing credit cards up to the credit limit specified, and you can then enjoy a far lower than average rate of interest on the transferred balance until it is paid off. Providing you pay at least the minimum amount requested each month you can take as long as you want to repay the balance without being hit by the higher interest rate, and there is no transfer fee involved.