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Credit Card Tips

In some ways, wiping out credit card debt can be like trying to lose weight. Choosing between paying your debts and buying a new dress is like choosing between a bland salad and a juicy steak. Most of the time, when it comes to gratification, instant trumps delayed. It's just how we're wired. Depriving yourself of all the good stuff may seem useless at first, but a debt-free life, just like a healthy life, is more than enough of a reward, even if it doesn't come quick and easy. So let GoBear lift you up from your financial rut — read on and find out how you can free yourself from the clutches of bad debt through these debt management tips.

1. Use the "snowballing" strategy.

"Snowballing" is a really fun and less intimidating way to name this debt management strategy, but it requires ironclad determination on your part! Prioritize paying off either the card with the highest annual percentage rate to save a ton on interest payments, or the card with the lowest balance to make it psychologically easier to tackle. Pay as much of the balance as you can for that "primary" card while paying the minimum amount for the others. Once you've finished paying off the first card, pay as much as you can for the next one, and so on.


2. Make two minimum payments per month.

Looking at your credit card debt and seeing how little the minimum payment is compared to the total balance, it can be really tempting to just survive on paying just the allowed minimum every single month. I cannot stress this enough: resist the temptation! But if you're really strapped for cash, you can use this amount as a tool. Pay the minimum amount every time you get your paycheck every two weeks. This can really shorten the time it takes for you to pay off your debt, while making the endeavor more organized and manageable.


3. Negotiate with your bank for lower interest rates.

This solution is just a phone call away! Ring up your bank and nicely request if you can lower the interest rate on your card. If your bank has a 24/7 hotline, call during midweek and off-peak hours (maybe even late at night or super early in the A.M.) so you won't have to hear the dreaded "Please hold" and LSS-inducing, you'll-be-on-hold-forever music. But before doing this, make sure you have good credit standing. If you haven't been paying your credit card debt on time, don't expect them to say yes immediately.

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4. Take the balance transfer route out of credit card debt.

Skyrocketing interest fees bogging you down?  Consider transferring your balance to a different credit card that has a significantly lower interest rate, or even 0%. This is called a balance transfer. But be careful: these lower interest rates are simply introductory offers, and you really have to finish paying it all before the promotional period ends. Otherwise, you could end up paying even higher interest fees, if the new card has a higher APR than the original card. Before taking this route, check if the APR and balance transfer fees are low enough to be worth the switch.


5. Avail of debt restructuring.

If you're really in dire financial straits, your last resort may be to ask your bank for a debt restructuring. Your credit card debt will be consolidated and the lead bank, or the one with the biggest exposure to you, will be in charge of the negotiations. You will have to present documents as proof that you can pay under the restructured terms, which may include longer loan periods of up to 10 years and very low interest. You may also be allowed to ask a relative or a friend to act as co-maker if your income is not enough to support the repayments. Some may require you to undergo debt management and counseling sessions before you're approved. But if your debts are due to life events or emergencies, the bank is more likely to grant the restructuring.


6. Look for ways to earn extra income and reallocate excess expenses to repaying debt.

Okay, so you've figured out how you want to be paying off our debts. Now, where to get the money to pay up? Dig into your list of talents and look for freelance jobs — whether you are a writer, a designer, a performer or a photographer. Cleaning cars, fixing broken stuff and babysitting can also be considered talents, right? Organize garage sales, or sell your white elephants like old cellphones, clothes or books on OLX.ph or eBay. Then, review all your expenses and figure out where you could try cutting down on spending. Stop leaving the air conditioning on all day to lower electricity bills, or cook your own food to bring to work instead of dining out all the time. A little change in lifestyle can go a looong way.


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