An Cosantóir

www.military.ie THE DEFENCE FORCES MAGAZINE | 27 TIPS FOR TACKLING CREDIT CARD DEBT Carrying credit card debt can be stressful, and taking control of it may seem impossible. Using a credit card is the one of the most expensive ways to borrow money, and high interest rates and penalty charges if you miss payments can make it difficult to reduce your balance. If you dread the arrival of your credit card bill and want to know how best to tackle this debt, follow these steps from the Competition and Consumer Protection Commission (CCPC). Step 1 – Don't ignore the problem Do you find that you are always running out of money, miss- ing repayments or relying on credit cards for your day-to-day spending? It is never too late to start taking control of your finances. The first step is to stop using your credit card. Resist the temptation by leaving your card at home. Step 2- Figure out how long it will take you to clear your debt Start by figuring out how much you can pay each month. It is important that you pay as much as you can afford, and not just the minimum. By paying more than the minimum by even a small amount you will reduce the time it takes you to get debt free and will save you money in interest. The CCPC's website has a credit card calculator which shows you how long it will take you to clear your debt if you continue to make the same repayments, and how long it would take if you increased your repayments. For example, if you have credit card debt of €1,000 and the interest - known as APR - on your card is 17%, it will take you two years to clear your debt if you pay off €50 a month and you stop using the card completely. If you increase your repayments to €100 per month, you could clear your balance in 11 months. So, the debt is paid off 13 months earlier and you save on inter- est repayments. Step 3 – Can you get a better rate on your credit card? Have you checked to see if there is a better rate available? Interest rates currently range from 13.8% to 26.6% so it pays to compare. Some providers offer an introductory 0% interest on transferred balances if you switch. So if you move your bal- ance, every cent you pay will reduce your debt, as you won't be paying any interest for that period of time. Check out the CCPC's credit card comparison tool to see what's on offer. Step 4 – Consider taking out a personal loan Although you may feel reluctant to take on more debt, it might make better financial sense to take out a personal loan to pay off your credit card debt. Interest rates on personal loans are generally lower than on credit cards. If you do this, make sure you stop spending on your credit card or else you will be faced with both the loan repayments and credit card repayments. Take a look at the CCPC personal loans compari- son to compare the costs of loans and to work out what your repayments would be. Step 5 – Get into good habits If you have a credit card there are some small steps you can take to help you keep your debt to a minimum and ensure that your credit rating is not affected. Firstly, try to keep your credit limit low and don't view it as a spending target. Consider reducing the credit limit to an amount you can comfortably afford to repay every month so you are not able to run up debt you cannot repay. Don't use your card for cash withdrawals except in emergencies, as you will be charged a high rate of inter- est often from the day you take out the money, as well as a cash advance fee. Set up a monthly standing order or direct debit for the minimum monthly repayment, or more if you can afford it, to avoid late payments. Late pay- ments can also appear on your credit history and may impact your ability to borrow in the future. By Áine Carroll, Director of Communications & Policy with the CCPC More information on financial wellbeing and the tools available can be found at www.ccpc.ie.

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