Tips For Paying Off Loans & Credit Cards

Paying Off Loans

The interest rates that are charged on credit cards and personal loans are some of the highest in the market and often contribute to people getting themselves into deep financial stress. If you have an outstanding credit card debt or a personal loan then it is im your best interest to use these money saving tips to try and pay off these loans as quick as possible.

  1. Pay Off High Interest Debts First        Add Comments
    Personal loans and credit cards have very high interest rates compared to home loans so you should start paying off loans and personal debts such as these as quickly as possible. The best way to help you do this is to make sure that you have your household budget completely under control and a debt consolidation repayment plan in place as part of this budget.
  2. Debt Consolidation Should Be A Last Resort        Add Comments
    You should use as a last resort debt consolidation to refinance credit card and personal loan debts together with your home loan, if you have one. The reason why this should be an option of last resort is because before you do this you MUST make sure that you put in place personal financial planning procedures to stop the debt accumulating again. Otherwise all you will be doing is getting yourself into more debt and still having to pay off a larger home loan and all of the extra interest that you will be charged over the life of that loan.
  3. Beware Of Penalties For Paying Loans Off Early        Add Comments
    With personal loans, and indeed with any other sort of loan, beware of any early termination charges or exit fees for paying off the loan early. These sorts of fees can turn a good loan into a really bad loan because you may find yourself stuck with a particular loan, even if your financial situation changes for the better and you want to pay off a loan early in order to save money on repayments.
  4. Always Pay Credit Card Balance By The Due Date        Add Comments
    If you miss paying off a credit card balance by the due date, even if it is just 1 day, you will be hit with hefty interest charges. Most banks will either back date the interest for every purchase or charge you interest for future purchases in the next month, so be aware of how the interest is charged on your credit card. Then, whenever possible try to pay off credit card balances in full by the due date each month by setting up future dated payments online.
  5. Setup Automatic Credit Card Payment Schedule        Add Comments
    Talk to the bank which issued you the credit card about setting up an automatic payment from a specific bank savings account on the due date of each month. This is the best way to avoid forgetting to pay off a credit card by the due date and will ensure that you never have to pay any interest on your credit card again, provided that you have enough funds each month in your nominated bank savings account each month.
  6. Beware Of Getting A 2nd Credit Card        Add Comments
    NEVER get a 2nd or 3rd credit card in order to take advantage of the low interest rates available on balance transfers unless you are going to cancel and cut up your original credit card. Otherwise you will just have double the amount of credit available and with the same bad habits in place you will soon find yourself in more financial trouble and paying interest repayments on 2 or 3 credit cards.
  7. Strategies For Transferring Credit Card Balances        Add Comments
    Transferring your credit card balance to a new card with a low or zero interest rate on balance transfers can be a useful money saving idea if you are disciplined and vigilant. If you think that you want to adopt this strategy for paying off credit card debts then there are 2 methods that you can choose :
    1) You can choose a new credit card with a low interest rate that is applied only to the balance that is transferred, but for as long as the balance remains outstanding.
    2) Alternatively you can transfer the credit card debt to a card that has zero interest on balance transfers for a specified period and then, after that period expires, transfer it again to another card with a zero interest rate on balance transfers. This method save you more money in interest repayments, but you have to do more work, be vigilant about the expiry date of the introductory period, make sure that you pay off debts as you go along and also be careful that applying for too many credit cards doesn't hurt you personal credit rating.
  8. Loans Should Be For Appreciating Assets        Add Comments
    It is generally only advisable to go into debt for an appreciating asset such as a house or land and not for items like a new car or holiday. So only consider taking out a personal bank loan if it is absolutely necessary and you are extremely confident about paying off the loan in as short a time as possible because the interest rates on personal loans is relatively high. It is much better to adhere to the old adage of "if you can't afford it then save, save, save until you can".
  9. Check Conditions Before Getting A Personal Loan        Add Comments
    For personal loans you should always ask if you are able to make extra repayments at any time, whether there are any fees for paying off a loan early and how long the life of the loan is. Checking these sort of things may seem a little straight forward but many people just look at the interest rate before taking out a personal loan. Also remember that if you get a personal loan for a longer period of time the repayments may be less but over the life of the loan you will be paying a lot more in interest.

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