Summer is the time of holiday breeze and sunshine, lots of laughs, shopping and splurging. But when the season turns, you get back to school or work and autumn comes, your holiday debts do not go away. If you ran up a really massive debt on your credit card this holiday and you are wondering what to do about it, have no fear you do not need to return the new clothes to the store, this post is for you.
Credit card debts
Huge credit card debts are some of the worst traps to fall into. The huge interest rate (often between 18% – 20% per annum) can be very difficult to take care of, especially considering the low minimum payments required on credit cards. One of the first things to do when working out your credit card debts is to transfer the balance to a card with a long 0% interest time period (some banks offer as long as 41 months with 0% interest). This will give you enough time to repay your debt, insofar as you are judicious with your future spending and repayments.
An important point to note is that you should not get discouraged if it seems to be taking too long to clear your debts. Credit card debts can take a while to clear because of the very low minimum payments. You should try using a loan/credit card payment calculator that will help you determine how long it will take and exactly how much you will be required to pay.
Personal loan debts
If you took a personal loan to take care of the costs of your holiday before setting out, you will need to put adequate measures in place to pay them off, now that you are back. The first thing to do is determine if you got the best deal on your loan. If you did not, you should visit a loan management company and determine a better loan (that offers you more favourable interests) and switch your debts. Many banks offer very competitive loan rates, and you will find it very easy to get one that will suit your purposes.
Before switching your debts, ensure you determine if your bank charges or penalizes for switching, and if the new loan provider you are switching to will give you options for a shorter loan term, that will make you pay more per month, but clear your debts a lot faster.
Things to note
- Do not waste too long before making a move to settle your debts. The longer you take in settling your holiday debts, the more they pile up. The best thing to do as soon as you get back from holiday is to get right to settling the debts.
- Be prudent during your repayment period. After racking up your huge debt, your most important objective should be repayment. You have to be prudent and avoid accruing any more debts in this period, as this will make it harder for you to clear them all in good time.
