Summer is always an expensive time of year. When the sun’s shining and the Christmas carols are jingling, it’s easy to forget about how much is being spent your credit card or loans. If that sounds like you, now’s the time you’re probably feeling the pinch. But there is something you can do to help you get on top of your debts.
What is debt consolidation?
Debt consolidation often involves taking out a personal loan that can be used to pay off multiple other debts.
Here are some potential benefits of doing this:
- It makes your debts easier to manage with just one repayment each month.
- It can save you money as the interest rate on a personal loan is often lower than store cards and credit cards.
- It helps you put in place a strategy to potentially eliminate your debts sooner.
Which debts should you tackle first?
Look at how much you’re paying in interest for any outstanding balances on store cards, credit cards, personal loans or any other debts. It makes sense to tackle the debts with the highest interest rates first.
Even if you have an existing personal loan on a similar interest rate, consolidating that amount with your other debts can still be beneficial as it allows you to manage your debts in one place, and helps you avoid multiple sets of fees.
How can I avoid getting into credit card trouble again?
A smart way to avoid credit card debt is to use a debit card (like an IMB Visa Debit Card) for all of the things you usually use a credit card for. That way you’re spending your own money and paying no interest on your purchases.
Giving yourself a weekly budget (and sticking to it!) is another way to avoid getting into debt. To kick-start your budget try IMB’s Budget Planner Calculator.
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