Tips to manage different types of debt

The older you get, the easier it is to see practical reasons why so many of us use a credit card or borrow money for a car, house, vacation or any other major expense. Debt can eat into our pay and savings for months or years on end.

Instead of letting these debts gnaw away at your money, you can use this guide to take control of them.

What kind of debt do you have?
– Credit card debt
– Car loan
– Mortgage
– Personal loan

How to manage your credit card debt

Credit card interest rates can be high and pile on the extra charges quickly and it’s important to get on top of your balance (or balances) as soon as possible. Here’s what to do:

Make regular repayments

Always make at least the minimum payment before the due date. If you’re someone who tends to be forgetful, use the autopay option to ensure you’ll never miss a payment.

Usually, you’ll have to pay 1% to 3% of your balance. But, since interest is calculated based on your daily balance, you can actually reduce the amount of interest that’s charged each month by making additional repayments.

Pay more than the minimum

It would take years to pay off your credit card if you only paid the minimum each statement.

0% balance transfer

Consider moving your debt to a card that offers 0% interest during the introductory period. Balance transfer credit cards give you a window of time to make repayments without accruing extra interest.

The only thing to be aware of is that at the end of the promotional period, the 0% interest rate reverts to a higher standard rate. So ideally, you want to be able to clear your debt before that happens.

How to repay your car loan

Whether it’s your first set of wheels or a shiny new upgrade, a car loan is a popular way to finance the purchase. But vehicles depreciate and in a few years you could find yourself stuck making payments on a car that’s not worth half as much anymore. Here’s what you can do about it.

Make additional repayments

Depending on the type of car loan you have, you might be able to make additional or lump sum repayments to help pay it off faster.

Check if you’re paying for extras

Some car loans provide extras that could attract additional fees and charges. If these features are voluntary, you could save money on your loan by opting-out of them.

Consider refinancing your car loan

If your current car loan is costing you too much, it’s possible to switch to a loan from a different lender. This can help you save on interest, additional fees and even offer more flexibility with repayments.

How to manage your mortgage

While the dream of owning a home or a bunch of investment properties is very appealing, mortgage repayments can quickly bring us back down to earth. Still, your dream for property can become a reality and stay affordable with the following tips.

Change your payment frequency

Interest on your mortgage is calculated daily and paid monthly. This means you could be able to save some money on interest charges by choosing to pay in biweekly or weekly installments. Just make sure to check the restrictions and terms based on your payment frequency.

Pay more than required

If your loan allows it, you could be able to save a small fortune by paying extra on the monthly amount. There’s a few different ways you could do this:

  • Lump sums. If you come into a large amount of money (lottery?), you could put a chunk of it towards your home loan to shave off some of what you owe.
  • Higher repayments. Paying more than what’s required for the month will help reduce the cost in the long run.

Even a small amount can have a big difference over the long term. Always check the terms and conditions of your loan to make sure extra payments won’t attract additional fees or variations.

Paying off a personal loan

Personal loans can be used for just about anything from financing a vacation to paying for large purchases or consolidating debt. Depending on the type of loan you get, you could consider some of the following strategies to keep your debt at bay.

  • Make additional payments. Usually available on variable rate or unsecured personal loans, this strategy allows you to save money on interest and pay off your loan faster and earlier.
  • Choose a short repayment term. You’ll pay less each month with a longer term, but it’ll end up costing more over the life of the loan. By opting for the shortest loan term you can afford, you’ll keep costs down. You can always contact your issuer to request a longer or shorter loan term.
  • Set up automatic payments. Personal loan repayments are usually the same each month, which makes them easy to budget for. To simplify repayments even more, you could look at setting up an autopay so you don’t have to do it manually every month.
  • Move the remaining debt to a 0% credit card. If you have a small balance on your personal loan, you could be able to save money by moving it to a credit card that offers 0% interest on balance transfers for a promotional period. Before you apply, make sure you compare your options and consider whether you’ll be able to pay off the balance during the promotional period.

Source: https://www.finder.com/how-to-manage-your-debt?fbclid=IwAR0oN2jb5IT7Rz43u2B8Kr1c299VTFZF5lmPnuZSc6qVplpVHfoU9CX46b0