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Managing Debt with Multiple Credit Cards
Friday January 1, 2010
Multiple credit cards are a reality for many people who simply require multiple avenues of financing in order to maintain their lifestyle and accounts. As a result it can quickly spiral out of control and leave one person responsible for a massive amount of debt that just keeps growing thanks to the high interest rates attached. Say you do have multiple credit cards, how do you handle the monthly debt repayments and how do you get ahead?
Obviously having multiple credit cards is not advisable with some people having up to eight or more cards. It is easy to see how this many debts can quickly get out of hand and result in massive late fees, usually around $30 a month, along with higher interest rates.
What's more, most credit cards lender operate under the Universal Default policy, this means that if you default on one credit card, the others reserve the right to increase their interest rates as you are now viewed as a greater risk.
So what can you do to manage these multiple debts and credit cards?
- Consolidate - If you have too many credit cards, and we are talking more than four here, then you really need to rid yourself of these excess cards as you will inevitably use them again and fall into further debt. So just like you would with any other kinds of debt, you should consolidate. Debt consolidation is one of the smartest moves a person in debt can make as it eliminates being hit with several nasty monthly bills and putting them all into one, or a few, main repayments.
- Do some maths - look at your credit cards and which have the highest interest rates. Quite simply, pay them off first. While you may only be paying the minimum monthly repayments on other cards, by taking out the highest monthly charge you will be surprised how quickly you will be able to get through the built up debt.
- Balance Transfer - while this may seem like you are simply adding to your list of credit cards, if you can eliminate the higher interest credit cards you will be able to completely pay off more credit cards and cancel them faster than if you simply made the monthly repayments off the higher interest cards.
- Become Online - online banking is a huge advantage when it comes to making your payments on time and eliminating the risk of late fees. Simply apply to have your bills sent online and set up automated payments every month to ensure that all bills are paid on time. What's more, by having the payment dates all at the same time this will also ensure that you know that all debts are paid on time.
- Remember this isn't a fast process - when you have been using multiple credit cards for an extended period of time it will take some time to reverse this debt damage so just stick to your new budgets and repayment plans and the debt will eventually disappear.
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