How to Handle Credit Card Debt?

How to Handle Credit Card Debt?
The Siliconreview
23 September, 2019

Credit cards come with lots of benefits; that's why a vast number of people use these cards for different purposes. But the customers should understand their responsibilities while taking advantage of the fantastic benefits of credit cards. You may start facing financial issues if you're constantly transferring balances, missing the deadlines of your credit card bills, and using a supplementary card for paying your card debt.

A report shows that more than nine million credit cards were issued in Singapore in 2015. That's the reason why the total debt of credit cards has reached over five billion dollars. Therefore, you must learn to handle your credit card debt and improve your credit score. Here are a few tips you can use to keep on track.

1. Determine the Interest Rates and Balances

If you are clear about the amount you owe on each of your cards, you will find it easier to take control of your debt. You need to create a list of interest rates and balances for each credit card. Consider transferring the balance to lowest "interest giving" account if the interest rate of a card is above 9%. Thus, you'd be able to repay off the remaining debt at an affordable interest rate.

2. Buy Your Credit Report

You must carefully analyze the situation of your credit score by looking at the credit report. You can also use this report to determine the total amount you owe. The record of your late payments, credit facilities, defaults, payment history, and bankruptcies is usually available on the credit report.

Make sure that you get in touch with relevant authorities to fix if there are any problems or inconsistencies found on your credit report. You can easily change any past errors that are found on your credit report.

3. Debt Consolidation Repayment Plan

If you're converting your unsecured loans and outstanding balances into a debt consolidation repayment plan, you must inform your bank about your situation. The debt repayment plan helps reduce the burden by allowing you to pay the card debt by installments. In the beginning, you must consider paying off the debts that have higher interest rates. Once these debts are paid off, you can move to the debts that have lower interest rates.

4. Pay more than the Minimum

You're supposed to pay more interest if you're making the lowest possible payment. If you want to stay safe from these dilemmas, you must consider paying more than the minimum requirement. For example, if you have an outstanding balance of two thousand dollars on your card with an interest rate of 18%, you're supposed to pay a minimum 2% of your balance every month.

In this situation, it will take around five years to pay off your debt if you're paying the minimum of forty dollars every month. And without even realizing, you'd be paying an additional four thousand dollars in interest during that time. If you want to pay off the debt fast, you must increase your payment.

5. Seek Professional Help

If you're still feeling confused about paying off your debt, you may get help from debt counseling to solve this issue. Fortunately, many experts can help you with your financial problems in a smooth way.