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				Debt Management - Free information to help YOU manage all your debts.		Tuesday, January 06, 2009

Use Savings to Pay Off Expensive Debt

With some credit card and store card rates at over 25% annually there is no sense piling up massive interest charges while you earn a negligible interest on your savings account.

Let your savings really work for you by using them to pay off some of your costly debt. If you have money idling in accounts that pay low interest rates get that money working for you by using it to get debt free even faster.

Minimum Payments Lead to Maximum Expense

Over the last few years the minimum payments on many credit and store cards have dropped from the standard of 5% to 2%.

There is one simple reason for this and it is not to help debtors, it is so that lenders can extract even more interest from you. If the interest rate you are charged is 1.5% per month and you make the minimum payment of 2%, how much have you actually paid off the debt?

If you can afford to pay more than the minimum payment ... PAY IT. Pay as much as you can, as soon as you can.

You don’t get out of debt by only ever making the minimum payments.

Be Wary of Borrowing More Money

Think carefully about borrowing more money to pay off debt. Seek advice first. Be wary of taking out a loan secured on your house as turning any unsecured loans into a mortgage means that you could lose your house if you do not keep up the payments.

Consolidation loans mean borrowing more money, over a longer period and will mean more interest to pay. This could make your situation worse in the long run.

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