Credit charge cards are truly one of mankind’s biggest inventions. Unfortunately it has also become one of mankind’s biggest curses.
Most creditors in the Philippines cost 3.5 % amount per month. That is about 42 % yearly. If you do the math, your present outstanding balances will increase every 2 years. If you owe your greeting charge cards organization P 10,000.00, in 2 years time it will become about P 20,000.00.
The best thing that you could do appropriate now is to pay all your bills immediately. That is if you have the money to do so. But what if you owe your greeting charge cards organization P 100,000.00 or even P 200,000.00 what should you do ? What if you have multiple greeting charge cards debts? The following are almost certainly the best steps that you could take in order to rid yourself of this bills mess.
1.) Get a bank loan with a cheaper amount of money – Some lenders and even banks offer an amount of 0.99 to 1.5 % attention per month. This is much cheaper than what the credit card companies cost. If you can protected a bank loan with a more affordable amount, especially a reducing one (Hard to get by these days, by the way if you do not understand the variation between minimizing charges and straight charges or set charges this will be mentioned in another post) use the bank loan to pay off of your bills, and take care of to never ever again use your hand made demand cards except if you can pay it within 30 days. That way you won’t be cost the per month attention. By borrowing at a cheaper amount you will decrease your losses due to attention. If you can lend from somebody at 0 % attention (A rich old uncle perhaps), that would be so much better. If you have several greeting charge cards bills, lend enough to pay all of your greeting charge cards bills. This way you can focus on shelling out only one financial debt and one amount. In financial planning this is better known as “debt consolidation. “
2.) Secure a stability move – Most creditors have a wonderful feature called “Balance move.” When you move your stability from other credit score charge cards they will only give you .99 percent attention per month. This is already a steal deal. Balance move are payable in certain terms like 12, 24 or 36 months. So we must say you owe your PS BANK Master Card P 100,000.00. If you have another greeting charge cards with we must say CITIBANK and your borrowing control with CITIBANK is also P 100,000.00, you could move your stability from PSBANK to CITIBANK. Instead of 3.5 % attention per month, Citibank will only cost you 0.99 % per month (About 12 % per annum). What Citibank will do is that they will add the per month attention and then divide that with the term that you wish to acquire of. For example of you wish to pay off your financial debt within a season the computation would be: attention times concept + concept divided by 12. So that would be 12 % x P 100,000.00 + 100,000.00 / 12 = 9,333,33. You will only have to pay P 9,333.33 per month. If you say that you will just pay P 9,333.33 per month at 3.5 % per month anyway that is based on “diminishing interest” (This means that your attention goes down if your principal goes down)as opposed to shelling out a “fixed interest” you will still end up with P 14,822 in financial debt at the end of the season. If you pay a set attention of P 9,333.33 at the end of the season you will end up with zero bills. (I would love to publish the table I made, but unfortunately I cannot do it here so just email me if you are interested)
But if you pay only the “minimum” per month, what will happen to your bills ? You will see that at the end of 12 months you still owe your greeting charge cards organization P 92,585.00. (This will be mentioned in a different post) That is why it is not wise to pay only the “minimum.”
There are several things to remember about “balance transfer”:
1.) Balance move is topic to acceptance by your greeting charge cards organization.
2.) The maximum amount you can acquire of for stability move is your borrowing control. Your house you have P 100,000.00 and you used up P 50,000.00 more or less you can stability move about P 50,000.00. However take note, this is not guaranteed. This is still topic to acceptance by your greeting charge cards organization.
3.) Create sure you pay the set per month payment. In our illustration above, pay the P 9,333.33 religiously, otherwise it will be made topic to the 3.5 % per month attention. Do not be tempted to pay only the “minimum” since you will be charged with 3.5 % attention over and above the 0.99 % attention. (This is increase jeopardy !)
4.) It is advisable not to use your greeting charge cards when you are using it for stability move to avoid confusion and to create sure that you can certainly create a priority to pay the payment for stability move instead of shelling out other greeting charge cards bills.
5.) Resort to stability move only when you cannot acquire of the first option. The first option (Get a bank loan with a cheaper attention rate) is still the best.