Getting out of credit card debt
One of the greatest ironies known to mankind is the credit card. It was one of his greatest inventions yet it has enslaved so many. Many credit card companies in the
1.) Get hold of a debt with minimal interest rate—If you try to ask around, you will find out that there are financial institutions or banks that provide loans with interest rates that range between .99 to 1.5%. Get a loan from these financial institutions and use what you have loaned to pay all your credit card debts. If you have multiple credit card debts, make sure that you loan enough to pay up credit card debts. This strategy, known as debt consolidation, helps you focus on one debt alone. Also borrowing at a very low interest rate – or 0% from somebody you know – lessens the adverse effects of loses obtained from very high interest rate. When you have already paid up your credit card debts, make sure that you do not entangle yourself with it unless you pay it within 30 days.
Mirage Credit Card will computes your credit card debt with them as follows: first they will multiply the principal with the interest rate after which they will add the principal then divide everything with the term or number months you have chosen. The result will be a fixed monthly interest. Using the example above, learn how your fixed monthly interest is calculated; (12 % (12 months multiplied by ,99%) x P 100,000.00 + 100,000.00) / 12 = 9,333,33. Now you will only have to pay a fixed interest of P 9,333.33 per month as your credit card debt.
How about paying the same amount, P 9,333.33 per month in the 3.5 % interest per month? That type of payment is based on "diminishing interest" (interest goes down if your principal goes down) and contrary to "fixed interest" in the end you will still have P 14,822 in credit card debt at year’s end. However, paying in fixed interest of P 9,333.33 gives you 0 credit at the end of the term. However, should you choose to pay the “minimum” in credit card debt, you will still have a debt of P 92,585.00 after a year. Paying the minimum is not a wise choice. So take advantage of the 0 balance transfer and move your credit card debt.
Before anything else remember the following if you want to take advantage of a balance transfer
1.) You are application for balance transfer depends on the credit card company’s discretion.
2.) The total amount of credit card debt you can transfer is limited to your credit limit of the other credit card company. So if you have a credit limit of P 300, 000 and you used P 150, 000 of it, you can now only have a balance transfer of about P 150,000. But this is still under the discretion of the credit card company.
3.) Be diligent and faithful in paying the fix monthly payment. Using our example above, if you are required to pay a monthly installment of P 9, 333.33, devote yourself to paying it or else the credit card company will penalize you and subject you to pay the 3.5% monthly interest. Don’t convince yourself to pay only the minimum because you will then be charged 3.5% interest instead of the .99% interest. Paying the minimum only brings more trouble.
4.) Advisably, do not add more debt to your credit card, which you have used for your balance transfer. This avoids confusion in the future and keeps you on your goal of paying the monthly installment in your balance transfer.
5.) Before even considering balance transfer, make sure you have tried the first option, which is looking for a loan that has a lower interest rate since it is still the best option. Only resort to balance transfer if you have failed to loan at a lower interest.
Before I end this post here is a quote from Earl Wilson: "Today, there are three kinds of people: the have's, the have-not's, and the have-not-paid-for-what-they-have's." Those that belong in the last category are those who have a long standing credit card debt. Try getting out of it as quickly as you can.