Pay off your credit card faster
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You’ve been going crazy on your credit card for a few months and now it’s pay-back time. So what is the very best pay-down plan?
Well, according to Financial Planner Scott Brouwer, of Big Sky Financial Solutions, you need to make getting rid of that debt a priority.
Brouwer suggests those in debt look at their lifestyle expenses and where they can save money. He says cutting down on discretionary expenses – such as cigarettes and coffee – will then help them get back into the black.
“Credit cards are an expensive form of debt and you are better off getting rid of that debt than diverting money into your car loan. The reason being is the interest rate on the car loan may be considerably lower than the outstanding balance on the credit card,” Brouwer says.
“If you are a smoker maybe consider what kind of difference it will make to your loan if you didn’t spend $11 on cigarettes every few days. You could also drink less coffee. If it means you have to live like a hermit for a short period of time to rid yourself of debt then great. You’ve obviously had a good time getting there so it’s time to pay the piper,” he says.
Brouwer says Plan B might be to look at consolidation as there are a number of cards that will allow you to do a balance transfer at a lower interest rate. But he says this will only work if you are disciplined about paying down the debt “otherwise you are just delaying the inevitable”.
He says another option is to refinance with lower cost debt by transferring the debt to a personal loan or home loan because of the cheaper interest rates.
While Brouwer acknowledges that paying for everything on plastic can prove drastic for some people who “spend money they don’t have on things they don’t need” he says from a convenience point of view they are fantastic.
“My wife and I use our credit card all the time. But we also make sure we pay it off every month so we are not paying any interest on it. If you actually have a budget and know you can afford what you are buying and have the ability to pay the money back then they can be a great tool of convenience,” he says.
If you are looking for a credit card but are concerned about all the hidden conditions, contact bnext on 1300 4 BNEXT or SMS
0447 4 BNEXT.
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This article has been prepared for general information and has not considered any particular person’s investment objectives, financial situation or needs. Accordingly, no recommendation (express or implied) or other information should be acted on without obtaining specific advice from an Authorised Representative of Big Sky Financial Solutions. Big Sky Financial Solutions (ABN 95 133 452 589) is a corporate authorised representative of Outlook Financial Solutions Pty Ltd (ABN 40 083 233 925, AFSL 240959).
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