Reduce credit card debts to grow your wealth

Reduce credit card debts to grow your wealth

A recent article in the Sydney Morning Herald outlined how battling credit card debt at the beginning of the year is a challenge for many Australians who blew their budgets over the Christmas and New Year period. They also suggested that implementing a simple five-step plan of attack can you tackle the piles of unwanted credit card debts and help you reduce credit card debts within months.

When you can reduce credit card debts, you get yourself in a better position to become and “investor” and grow your wealth. Here are the five steps:

1. Cut-up those cards

This is an easy way to put an immediate stop to the temptation of spending more on your card.

2. Prepare a plan of attack

Checking your latest card statements and work out how much debt you owe. Then list them out, prioritise them from lowest balance to highest balance.

3. Pay off more than the minimum amount

This is the key to help you reduce credit card debts. By simply paying off the minimum amount it will take you years longer to kill your debt and you’ll fork out a fortune in interest charges. The trick is to pay ALL the extra money on the lowest credit card and the minimum on the rest. Once the first is paid off, focus on the next.

4. Take advantage of balance-transfer deals

With a balance-transfer card you can avoid paying interest on your card for up to 18 months, this means more of your repayments will be going towards your debt rather than your interest charges,’’ But if you do switch to a balance-transfer card. Cut up the new card immediately so there’s no temptation to spend on it. Balance-transfer deals allow customers to transfer plastic debts from one card to another and in many cases enjoy zero per cent interest rate periods to shave back the debt.

5. Only pay using debit

Adopt a new approach to paying for goods in 2015. Stop using the credit card and look at alternatives such as paying by debit card. This will put the brakes on your card debt becoming bigger and also means you are only using money you already have and not money that you don’t have.

We hope you find these five steps useful to help you reduce credit card debts, get you Investment Ready and started on the path to growing your wealth.