For over a year, the world has been at war against a foreign enemy that has taken lives, threatened world economies, forced businesses to close shop as well as disrupted livelihoods. In fact, Channel News Asia reported that credit card debt amongst Singaporeans are expected to rise the longer the Covid-19 pandemic rampages across the globe due to job losses and pay cuts.
Indeed, financial woes are deemed as norms during these difficult times as surely, many have spent uncountable minutes staring at their unpaid bills, pondering how they will get out of debt during rough times. Common as it may be, it should be highlighted that it is possible for you to get out of credit card debt without breaking a sweat or hurting your pockets even more.
How, exactly? By taking up a credit card consolidation loan, or in other words, converting your credit card debts into a personal loan. Before you brush off the idea, take some time to read how credit card consolidation loan benefits you:
Benefit #1: Pay less interest
Some quick research will tell you that credit card interest rates are generally lower compared to personal loan interest rates. Keeping this fact in mind, by using a personal loan for credit card debt consolidation loan, the lower interest rates will take some load off your shoulders as it helps to reduce the number of repayment years, and help you save a significant amount of money. Here’s the icing on the cake: if your credit score is commendable, you may be eligible for an even lower interest rate on your personal loan.
Benefit #2: It streamlines payments
Managing different credit cards may be simple. However, ask any credit card holder, and they will say that managing different repayments can be a confusing chore. Credit card debt consolidation makes your life easier as it uses the funds to pay-off your outstanding credit card balances simultaneously. So long as you refrain from accumulating more credit card debt throughout the repayment period, you will only require to make a single loan repayment every month as compared to managing multiple financial obligations.
Benefit #3: Repayment will be more consistent
A credit card consolidation loan occurs in fixed instalments. Therefore, every month you will know the exact amount you are required to pay, and will always be aware when it is due. Such a beneficial perk will undeniably be a huge sigh of relief to those who are facing credit card debt, and were required to pay varying amounts each month. This is due to the fact that consistency will make it easier for them to allocate their budget accordingly.
Benefit #4 : Chance To Improve Your Credit Score
Individuals caught in credit card debt often hurt their credit ratings due to high utilisation rates, which will classify them as risky borrowers. By applying for credit card debt consolidation loan or personal loan, and keeping your credit accounts open, it will preserve the longevity of your financial history, and ultimately, help lower your utilisation ratio as well as optimise your credit score. To top it all off, making timely repayments will boost your credit report too.
So, you’ve settled your credit card debt. What’s next?
A credit card consolidation loan has many benefits for individuals who are in credit card debt, especially when it is applied or used properly, and wisely. Even so, it is important to be mindful of our spending habits to prevent history from repeating itself, such as the following tips:
Control your credit card use
Credit card ownership is relatively high in Singapore, and undoubtedly, many credit card holders will share that temptation can be immense. That is why in the future, it is important for you to monitor your credit card usage. In fact, it would be helpful to determine scenarios or circumstances that will permit you to use your credit card, such as during medical emergencies. In doing so, it will be easier for you to prevent accumulating credit card debt.
Make a repayment plan
Delaying your credit card repayment spells catastrophic hindrance to your finances. To prevent yourself from accumulating credit card debt, it is best for you to not just monitor how often you use your credit card, and the amount. It is similarly necessary for you to be on top of your repayment plan. One of the best ways to do so is by formulating a repayment schedule that will ensure you make your dues, and avoid accumulating debt.