Sky-high Interest Rates: The Time to Get Out of Debt is Now
Are you currently in a struggle to overcome your debt? As you comply with the minimum payments each month, you might experience setbacks, making you realize that your journey towards paying off your debt is never-ending. The interest rates that you’re paying seemed unbearable causing you the signs of debt depression.
Well, in facing debt problems, there is no exact timing when and how, but preventing the matter to become inevitable is a must. Each time you get into debt, you must consider acting to it immediately. The best thing to do is to pay it off by making more than the minimum payment each month. This is especially taken into consideration if your debt accumulates variable interest rates.
Moreover, higher interest rates can equate to higher monthly payments, which can rip off your income. So, each time you pay, less of your payments will be deducted to your principal, and will then be utilized in servicing your debt. Most people would tend to cut expenses, which is a good approach to become debt-free.
Ways to Lower and Lock-in Your Interest Rates
Apart from cutting cost, there are also other ways on how you can cope up with your debt interest rates, which are as follows:
A 0% Introductory Interest Balance Transfers
Many credit cards grant special introductory deals. You can probably receive a 0% introductory interest from six months up to one year. Besides you can do balance transfer if you’re holding an outstanding balance on your credit cards. This is a way to lower your credit card interest rates, which can free up some money intended for your payment each month.
However, it is necessary to check the institution since many of these companies may charge you 2% to 3% to do a balance transfer. Furthermore, this may be beneficial for a while but not for long since your interest rates will regress to increased rates after your introductory period.
Low Rates via Refinancing
If you acquire variable interest loans, you’ve possibly noticed your charges increased. In this case, you might favor refinancing your mortgage, or other forms of debt to shift for lower fixed rates. This allows you to lock in a lower rate which you don’t have to worry about its potential increase over the period.
Debt Consolidation Loans
Another way is to consolidate your loans, which allows combining your consumer debt into one single loan that requires one payment each month at lower interest rates. In considering a debt consolidation loan, you just have to make sure of getting fixed interest rates and avoid loans that require prepayment charges.
Consider a Debt Settlement
A debt settlement approach is one of the debt relief approaches in Canada. Basically, you need to consult a debt settlement company that will act on your behalf in arranging with your creditors. Furthermore, it allows you to repay your debt faster than negotiating debt settlement on your own. Also, you must be aware that this program can affect your credit.
Other Ways to Becoming Debt Free
Once you have successfully find ways to lower your interest charges, your next target is plan for debt repayment. You can either be frugal in so many ways or try to do some sidelines to suffice your debt payments. Additionally it is the best time to scrutinize your incomes versus your expenses and check ways where you can reduce costs.You should also be aware of the reasons behind your credit card interest rates in order to design a good strategy.
For instance, slashing your cell phone bills, or saving money during dine out, or analyze where you can cut back on your budget. Whatever strategy you have in place to face your debt problems, the bottom line is changing you habit of spending and being disciplined towards managing your finances.
CONSUMER PROPOSAL EXAMPLE
Example Unsecured Debts
|2||Credit card 1||$6,812|
Your Monthly Repayments Would Be
a Consumer proposal $748
(total contractual repayments)
a Consumer proposal $295
(total contractual repayments)
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances.