Transfer My High Interest Card To A Low Interest

How to avoid sinking deeper into debt

If you feel like you are sinking deeper into bad debt, the first thing you probably need to do is stop spending on credit.

If taking the scissors to your credit card is too final for you just yet, then at least remove it from your wallet, put it in a cup of water and freeze it. That way, it is not easily accessible and will save you from temptation.

Credit card use is actually growing at its slowest pace in more than a year but the average credit card balance in December 2010 was still $3314.

If you feel you have a big problem, are being chased by creditors or are considering a debt agreement, then you need to seek help from a financial counselling service through various agencies, which range from Relationships Australia to Lifeline.

Most Australians are spending beyond their means.

Everyone has probably heard of the terms good debt, which is tax-deductible debt for investing, and bad debt, non-deductible and usually with the highest interest rate. This is typically a credit card debt or store credit and where all your spare cash flow needs to be directed.

AMP financial planner Tony Rigby says there are three different types of debt bad debt, necessary debt and good debt and they should be paid off in that order.

Necessary debt is a home loan, while good debt is tax-deductible and includes loans for income-producing investments such as real estate or shares, he says.

Pay off bad debt such as credit cards first, as they usually have the highest interest rates. If left to spiral out of control, they can cost a person thousands of dollars in interest over many years.

Once bad debts are under control, a person can proceed to target other debts such as car and home loans, saving even more in interest.

Police Credit Union's executive manager of product and marketing, Paul Modra, says the sad fact is debt can overtake many people's lives and cause despair and unmanageable stress.

Mr Modra says with credit cards drawn to their limit, personal loan repayments plus living expenses, debt can put pressure on relationships and your sense of wellbeing.

"Parting with cash is visible but the impact of using a credit card is not as obvious until the statement arrives, which consumers need to constantly have in mind if they want to get on top of their debt."

CONSOLIDATE DEBTS

If you have several cards maxed out, consider rolling all the debt in to one low interest-bearing card or loan to save interest.

A Simple Method Of Consolidating Credit Card Debt by Jermaine ...

Debt can easily get out of control if a person is not diligent. The good news is that debt can be managed. The most troublesome type of debt for consumers today is credit card debt.Millions of credit card customers are searching for a means to manage their financial responsibilities. Often debt management is found through credit card consolidation. Credit card debt consolidation can often create more of a financial burden if you do not use a careful approach.It is very important that you have your credit card accounts under control and are not over extended credit wise. One common solution to consolidate credit card debt is by transferring a high interest rate card balance to a credit card that has a lower interest rate. As an example, maybe you have several credit cards that have a balance of a few hundred to a few thousand dollars and a high rate of anywhere from 17 to 20 percent or more. A huge amount of money could be saved yearly by simply moving those higher balances to the card that has a lower interest rate. Perhaps you have a card that has an interest rate of 13.5 percent or lower.It may be possible to transfer the higher interest card balance to the lower interest rate card. With a balance that is currently charged several points higher you would see a significant savings by transferring your higher balance to a newer lower interest rate card.This would be a positive method to consolidate credit card debt. But wait just a minute. There are a number of downfalls that need to be addressed before considering this sort of credit card debt consolidation. Before you transfer any balances please consider the following pitfalls: The new card that you are considering may be offering a teaser rate and at some point in the future that teaser rate will expire and become a higher interest rate. Read the fine print terms of the new card so that you are aware of exactly what the new higher rate will be in the future and do not suffer any set backs to your debt consolidation plan. The "empty card" syndrome: If you have decided that moving your high rate balance to a lower rate card will help you to consolidate your credit card debt, make sure you have a plan for that new zero balance card. Do not become a victim of the "empty card" syndrome. Many people will find themselves back to square one and in debt by charging again on their zero balance card only because of the convenience and the zero balance.