In this current economic climate, it is pretty easy to understand why many people have to resort to drastic measures such as using credit cards and payday loans. This often results in individuals losing control over their finances very rapidly and spiraling towards personal bankruptcy. The main problem is that banks are allowing young people such as students or even those that have just joined the countries workforce take out credit cards far too easily, without taking into account their personal circumstances. Often introductory credit cards can still offer up to half of someone’s base wage as the limit and they are becoming increasingly easier to increase. This is mainly due to the fact that the banks want you in debt as otherwise they don’t make any money.
If you are finding that you are struggling with your credit cards you are going to want to take action straight away as by the very nature of how APR works, the debt is going to keep increasing gradually. Start by making sure that you aren’t using anyone else’s money to pay off your debts, this is half the problem. There are far too many people that use one credit card to pay off another. Again this is a vicious circle that is very hard to get out of and it will result in you just digging yourself deeper into your financial crisis hole.
Kevin Donovan from Financial Update suggests quite a few interesting options on how to pay your cards off. Start by making sure that you stop using them unless it’s for the bare essentials. This part is all about discipline, if you have no more going out the only thing you are going to have to pay off is interest. Start by stopping all your direct debits or standing orders from that card that aren’t vital. It is very easy to set these things up and then not realize that you no longer need the service or product that you were paying for, but the money will keep coming out of your account until you stop it.
Next when you have managed to reach some stability you can start thinking about paying the debt off. Many people suggest the snowball method where you start by paying off the smallest amounts first and then move your way up in order of size; however I would recommend an alternative. I personally prefer to pay off the cards with the highest interest rates first, in this way you will not find yourself in further debt because you weren’t organized. As a last tip I recommend that you always have the minimum payment on a card set up so that you don’t have to pay anything in late fees just because you didn’t remember.