Keeping your financial house in order involves getting a good handle on your debt. Too much debt can sabotage your credit score and make it that much harder to open new lines of credit in the future. It’s not too late to clean up your finances for the new year and make debt management a higher priority as your prepare your budget. Here are five debt management tips to consider in 2018:
Consolidate High-Interest Debt
Paying monthly interest charges can be a burden that sets you back financially in the short-term and long-term. One way to mitigate the effects of credit card debt is to consolidate the balances of a high-interest credit card to a lower-interest or zero-percent interest credit card. Paying off that consolidated balance as soon as possible can help you save money — especially if you are carrying higher balances.
Look for cards that also waive balance transfer fees so that you don't pay extra just to coordinate the transaction. You can consolidate some or all of your credit card debt to this card to save money.
Create a Debt Payoff Plan
One of the best ways to boost your credit score is by reducing your overall debt load. Credit bureaus look for signs of too much debt when calculating your score and those monthly payments towards your credit cards or loans may be a burden on your budget. Make a commitment to pay off some or all of your balances to lighten your debt load and lower your monthly payment liability.
Monitor Your Credit Score
It's a good idea to check your credit score at least once a year and review your credit report for any errors. If your credit score is lower than you would like it to be, you can start doing some credit repair work by reducing your debt load and making sure all payments go out on time. If you think there's a mistake on your credit report, make corrections and notify the credit bureaus.
Stick with a Debt Budget
If you always seem to be in debt by year's end, turn things around this year by setting a budget even for your debt. Whether you use credit cards regularly or are thinking about getting a loan, consider setting a limit on the amount of credit you will use in the upcoming year so you don't feel overwhelmed by those monthly payments. Save some room for any emergency expenses that might pop up so you don't overextend yourself once again by the next new year. Staying within your budget can help you better manage your finances through the year and ensure you won't be trying to keep up with minimum payments or high-interest debt all year long.
*All content provided in this blog is supplied by Sabah Karimi and is for informational purposes only. Barclaycard makes no representations as to the accuracy or completeness of any information contained in the blog or found by following any link within this blog.
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