Credit card debt can feel overwhelming , however the good news is refinancing can help you better manage the cost and to pay it off. That said, you’ll need a good strategy in place. We’ve put together 7 tips to help you successfully refinance credit card debt.
Refinancing credit card debt will only work with the right credit card. Here’s what you need to look for in a credit card for refinancing debt:
The key to lowering the cost of your debt is to pay it off during the introductory period. This is the only time when it won’t attract any interest charges. After the grace period ends, the credit card company will start charging interest. You’ll start paying interest on any debt that’s still not paid off at this time. These interest rates can be very high and will add to the total cost of your loan.
Having a debt repayment plan is super important. Without a plan in place, you’re more likely to miscalculate your payments. This could cost you dearly. Here’s how to make a debt repayment plan that works for you:
Your monthly credit card statement will include your debt payments as well as all new purchases you’ve made with the card. If you’re still struggling to afford the bills every month, look for ways to cut back on your expenses. Go through your credit card bills of the previous few months. Some will be unavoidable but there may be a few that you could avoid.
How much are you paying every month towards eating out or ordering takeaways? What about your cable TV or phone bills? Cutting back on non-essential expenses can help more than you can imagine. It will free up much-needed cash that you can put towards clearing off your debt. This frugal lifestyle doesn’t have to be permanent. It’s just as long as you’re carrying the debt.
Cutting back on spending is not the only way to free up cash. Why not consider ways that you can earn additional income? Can you take on additional shifts at your workplace? If not, think about ways you can make money using your education and innate skills. There are endless opportunities out there for anyone looking for a side hustle. The additional income will help you pay down your debt before the grace period ends.
Most credit card issuers will charge you a balance transfer fee. This is usually calculated as 3% to 5% of the total amount of debt transferred. It’s important to make sure that your savings are more than the cost of the balance transfer fee.
Calculate the balance transfer fee on the total amount of debt you’re transferring. Also calculate your total savings in interest. If the balance transfer fee is less than your total savings, it’s worth applying for that card. If the fee is more than the savings, look for a card with a lower balance transfer fee.
Credit cards often come with assorted fees such as annual and penalty fees. These fees vary among lenders as well as card holders. The interest rates vary too. Before applying for any credit card, you must take time to read the fine print thoroughly and understand what fees apply. You want to make sure that you’re not stuck with an expensive card after the introductory period ends. Ideally, you want to look for a credit card that works for you long after you’ve cleared your debt.
This is absolutely crucial to staying debt-free. No more minimum payments. No more late payments. No more impulsive purchases that you can’t afford to pay by the due date. That’s what got you into trouble in the first place. Not only do bad financial habits add to your debt but they also seriously damage your credit score. This will make it even more difficult to qualify for a low cost loan or credit card in the future.
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