It seems that in today’s world, debt is an inevitable part of life. All of us seem to carry around some debt with us whether it’s tens of thousands in loans, or smaller amounts on credit cards. But for those that have any amount of debt, there are several debt management strategies that can be implemented. These strategies will not only help save you money, but will also help prevent you from falling further into debt!
The first simple strategy to manage debt is to reduce the amount of credit cards that you have. Just about any store that you walk into today will have its own store credit card. This card works just like any other credit card but it’s valid for that store only. The problem with having a lot of these cards is that they all carry high interest rates. This means that instead of paying one interest rate to one card, you will be paying several interest charges to multiple creditors! Plus, you will be restricted as to where you can shop and where you have credit. If you must carry a credit card, carry one, and only one, and you’ll already be saving money on interest charges. Plus, not having so many cards in your name will look better on your credit report, and will make debt much more manageable!
Better than carrying any type of credit card, choose a debit card instead! These cards work by withdrawing money directly out of your bank account, instead of charging you at a later date like credit card companies do. Using a debit card instead of a credit card will ensure that you don’t pay for things that you don’t have the money for. Plus, you won’t be paying high interest charges like you would with a credit card. Different banks have different policies regarding debit cards so be sure to ask about the different fees that might be associated with it. Whatever they are, debit fees are sure to be lower than any interest!
For any type of credit, always choose variable interest where possible. A varying rate will fluctuate and you’ll generally pay lower interest rates than loans that have a fixed interest amount. Many credit companies and lenders have a rate that actually combines these two so that you will pay the lowest amount available at all times. Be sure to always ask about interest rates so you can see how much that line of credit, credit card, or other loan is really costing you!
For those that find that they are way in over their heads with debt, debt consolidation may be a good debt management strategy. Debt consolidation works by combining all of the debt into one monthly bill, for one interest charge, and paying that debt off over a period of time. There are many debt consolidation companies that are willing to offer this kind of service and they can be a great help for people who really can’t see a way out. Not only is there one monthly fee to pay, but you also won’t be paying several interest rates to several different companies! Only having one bill arrive in the mail every month instead of several can also do wonders for peace of mind!