Use a balance transfer credit card
One of the smart ways to get out of debt is to finish a balance transfer. You can transfer debt from high-interest credit card(s) to a balance transfer credit card because it offers no interest for up to 21 months.
Consolidate debt with a personal loan
Personal loans can be a good choice to balance transfers if you have a large amount of debt. If your debt is spread out over several credit cards, you can consolidate it into a single loan. And depending on your credit score, you may meet all requirements for a loan amount that will cover your entire balance. A personal loan provides you with a fixed amount of cash over a fixed period and at a fixed interest rate. The interest rates for a personal loan are rarely 0%, however frequently lower than keeping a balance on your current credit card(s).
Borrow money from family or friends
In case your credit is poor (scores below 580), you may make some hard time qualifying for a balance transfer credit card or loan. As another option, you can ask a relative or dear companion for a credit.
Ensure you set up a repayment plan before lending any cash and stick to it so you don’t risk harming your relationship.
Pay off high-interest debt first
If you have debt across multiple credit cards, If you have debt across multiple credit cards, it’s generally a smart thought to start paying off the card with the highest interest rate first. This type of debt repayment is known as the avalanche method. You can minimize the interest you accrue this way, which will assist you to save money in the long run.
Once the high-interest balance is paid off, you can begin to handle the debt on your balance transfer card more aggressively.
Pay off the smallest balance first
A snowball method of debt repayment is an alternative to the avalanche method. Paying off the smallest balance first can be a smart way to support your confidence and kick off debt repayment. Consider you have RM 5,000 balance on one card and a RM 1,000 balance on another. If you begin paying off the RM 5,000 balance first, it may seem like you’re barely making a dent in your overall RM 6,000 debt.
But if you pay off the RM 1,000 balance first, you’ll be able to see your improvement sooner and feel more confident about your ability to pay off credit card debt.
Financial advisors usually don’t suggest the snowball method, since it can in some cases bring about more premium charges compared to if you paid off high-interest debt first. In any case, toward the day’s end, the most significant thing is to create a debt repayment you can stick to.
Spend less and Save more is a smart idea. Pay off your debts is the key to success.