Most people experience the stress of having to deal with financial debts at least once in their lives. Whether it is down to irresponsible spending in the past or to factors completely beyond your control, dealing with debt can be frustrating, time-consuming and emotionally draining. However, most people also have access to a wide variety of ways to help reduce their debts.
The following takes a look at some of the most effective things you can do to help get your financial life back on track once again while improving your credit rating in the process.
1 – Compare Utilities and More Online
First and foremost, you should look into the various ways in which you can reduce your outgoings. Cutting down on your expenses doesn’t necessarily mean that you have to sacrifice any of the things that you like doing or buying. Take utility bills for example. Many people pay more than they need to for things like their electricity, gas and water supplies.
You may find that by comparing the costs of the various tariffs available in your area, you can save quite a bit by switching to a new provider. Best of all, it likely won’t make any noticeable impact on your lifestyle other than saving you money.
The same applies to other services such as mobile phones, you can get equally a great deal on your next contact phone by comparing tariffs, whilst at the same time you can get the most cash back for your old phone by using price comparison sites such as Sell My Mobile – it’s a win-win situation.
2 – Get a 0% Balance Transfer Credit Card
Taking out another credit card might not sound like the best way to deal with debt, but a 0% balance transfer card might be exactly what you need to consolidate your debts and avoid paying high interest rates. You will have to pay an initial transfer fee of around
three percent, but once you have transferred the money into the new account, you will have a set period of time to pay off the debt without having to pay any interest. Some of these balance transfer deals are particularly generous, offering interest-free periods of up to 28 months. Be aware, however, that such credit cards generally don’t offer very competitive interest rates on purchases and withdrawals. For this reason, most people take out a 0% balance transfer credit card solely for dealing with debt.
3 – Close Old Accounts
If you have old bank accounts or credit cards which you no longer use and do not plan to use in the foreseeable future, you should contact their providers and close the accounts. Even if you do not have any debts on these old accounts, having multiple lines of credit does have an impact on your credit rating, so you should avoid keeping open any accounts which you don’t use. If you want to keep another credit card for purchases, this i
s fine so long as you use it carefully and try to pay off the debt in full at the end of each billing period.
4 – Avoid Payday Loans
Payday loans are typically small loans which you take out for a short period of time until your salary is paid. These might sound like a useful lifeline for those who find themselves struggling to pay off an urgent bill, but they should be avoided if at all possible. This is because payday loans are an absolute rip-off, with enormous interests often in the region of 5,800 APR. Although payday loans are meant to be paid back within a matter of days or a few weeks at most, the interest rates are many, many times higher than they are with personal loans, credit cards and bank account overdrafts.
5 – Pay More than Minimum Repayments
Every credit card requires that you pay off a minimum amount off your debt every month. Typically, this is around three percent or £5 (whichever is higher). However, if you only pay off the minimum amount, it can take an eternity to pay off larger debts. Instead, get into the habit of putting some money aside every month and paying off as much as you can afford each time you receive your credit card bill.
About the Author: By Craig Timmins
We would like to thank the author of this post, Craig Timmins, who currently runs the blog over at SellMyMobile.com – a price comparison website for people looking to sell their old phones and tablets.