Now that the winter holidays are behind us, not to mention a costly Valentine’s Day, you probably have at least a few months before your next vacation. While you may have gone overboard on your spending during the holiday season, you certainly do not want to carry over your debt to the summer vacation, or even worse, to the 2015 winter holidays. Especially with the average credit card interest rate hovering around 34%!
Here are some ideas to help you get rid of nagging credit card debt before the summer:
Go on a financial diet
Many of us are open to the idea of going on a diet to lose weight; but when it comes to freezing spending to lose debt, we shy away. At the end of the day, the best way to get out of debt is to save more money so that you can pay off your credit card sooner. There are two ways to do this: either increase the amount of money you make, or decrease your expenses. The latter is probably more feasible, so suck it up for at least a month, and cut off any non-essential expenses. That does not mean you need to constrain yourself to home until the summer season. Find low cost, or free, activities to do on the weekend. Even cutting out shopping for a few weeks will help you put a dent in your credit card balance.
Find a balance transfer card
We’ve explained the benefit of balance transfer offers many times before. In summary, taking advantage of a lower interest rate with another bank, even if it is only available as a special offer for the first few months, can help you get out of debt sooner.
Pay with cash
The last thing you want to do when you are trying to pay off your credit card debt from the holidays is to keep using the card. Nothing is more discouraging than making a payment on your credit card only to see the outstanding balance barely decrease.
Use installment plans
Many banks in the UAE offer 0% installment plans, where you can convert a large credit card purchase into a 6-month plan to pay it off in equal installments. Not only will this reduce your interest payments, but it will also force you to pay off your large purchases according to a set amount and schedule.
Consider a personal loan
Compared to credit cards, personal loan interest rates in the UAE are 4 times lower. This means when you make a loan payment, a higher percentage is going to actually paying off the debt rather than the interest charges. Similar to a credit card installment plan, a personal loan will also force you to follow a strict schedule of monthly payments towards your debt.