Dealing with a large amount of credit card debt is one of the most difficult obstacles to overcome with regards to personal finances. Not only is it difficult to pay off the credit card balance, but the high interest rates charged by the bank exacerbate the problem over time.
Here are a few tips that could help you not only ease your debt burden, but also get rid of it completely:
Take advantage of balance transfer offers
Transferring your balance to a credit card with a 0% introductory interest rate can help reduce your interest payments temporarily. For example, Mashreq Bank currently offers 0% interest for the first 6 months of transferring your credit card balance to a Mashreq Bank credit card. However, keep in mind that the bank will charge a balance transfer fee or processing fee. This is usually around two to four percent; Mashreq Bank currently charges a four percent processing fee for balance transfers. This fee is typically added to the credit card balance. Of course, if you take advantage of a balance transfer promotion, it is important to remain disciplined and to continue paying on time; it is counterproductive to delay monthly payments until the interest charges kick in.
Use a credit card repayment calculator
Another interesting tool to help you get out of debt is using a credit card repayment calculator. The calculator will put into perspective the amount of time it will take to repay the debt amount by only making the minimum payment amount versus how much should be paid to settle the entire balance in a given period. This can help structure a timetable for individuals who are keen on becoming debt-free.
Obtaining a personal loan
Debt refinancing is also an option to help speed up the debt-free process. The interest rate on a personal loan is much lower than the interest rate on a credit card. According to bayzat, the current average interest rate for personal loans is 7.5%, compared to 32.8% for credit cards. If you have a large amount of credit card debt, it definitely makes sense to take a personal loan to pay off the credit card balance. Emirates NBD offers personal loans (at attractive interest rates) to every demographic, including self-employed individuals, business owners and employees of any company.
The name of the game to becoming debt-free is discipline. Once you have made the choice to become debt-free, make sure you stick to the plan that you have set out for yourself. It is easy to become complacent, but reducing your debt burden will provide immense financial, emotional and mental benefits.