5 Fast Ways to Reduce Credit Card Debt in Singapore
If you are looking for quick ways to reduce credit card debt and mend credit score in Singapore, try two or more of these five techniques.
Small credit card purchases and expenses can add up over the months and years, and before you know it, turn into a debt mountain.
To improve your financial position, and to create contingency funds for future needs, you’ve to repay the money owed to various creditors. One of the best ways to pay off credit card debt is focusing on credit card balances.
Follow these five tips and get rid of liabilities as fast as you can.
1. Calculate balances, annual fees and interest rates
Before you create a repayment strategy, check balances, minimum due, and credit card interest rates on cards you own. This is important when accumulated balances are in 4-5 figures. When you’ve noted down these figures on paper or excel sheet, the next step reveals itself. If you’ve been paying annual fees on your card, request the bank to waive it off. Pay your outstanding with money saved on annual fees.
2. Negotiate lower rate of interest for credit card debt
A quick and effective way to save on interest payment (on current debt and future purchases) is to negotiate a lower rate of interest. Call up your relationship manager, and put in a polite request. Are you worried your request will be rejected?
Credit card companies prefer to get payment in time rather than you going the bankrupt route. If you’re a long-term customer, they are more likely to shave off some points from your rate. While the rate change seems negligible, you end up saving or avoid repaying hundreds of dollars on higher balances.
3. Choose repayment strategy
To reduce unpaid credit card debt in Singapore quickly, adopt either of these ways – pay highest-interest card first or settle lowest balance first. With the first method, rank credit cards from high to low interest rates and tackle the card with highest rates first. Pay minimum due on other cards and use extra cash to pay off card balance which carries maximum interest.
In the second option, you reverse the order of credit cards. While you continue to pay minimum balance on all other cards, settle credit card with lowest balance in full with extra funds. With debt cleared on one card, you’re motivated to payoff other cards too.
4. Make 2-3 minimum payments per month
The repayment strategy mentioned above works only when you have sufficient funds. You don’t always have spare cash or additional income. In this scenario, choose 2-3 credit cards with both a large balance and high interest rates. Pay minimum due on these cards every month without fail. This reduces your overall balance, saves you some interest money, and improves credit score.
5. Avoid using credit cards
Unless you’ve maxed out your cards, chances are that you continue to buy with plastic and add to the debt pile. If you’re serious about tacking liabilities head-on, put your credit cards on hibernation mode. Use cash for all purchases and payments, until total due has reduced to at least ¼ of original amount. Cash purchases will also make you think twice before you buy something.
Which of these debt management tips will you follow to clear your credit card debt in Singapore?