“Today, there are three kinds of people: the have’s, the have-not’s, and the have-not-paid-for-what-they-have’s.” ~Earl Wilson
Credit cards are absolutely one of mankind’s greatest inventions. Abominably it has aswell become one of mankind’s greatest curses.
Most acclaim agenda companies in the Philippines allegation 3.5 % absorption bulk per month. That is about 42 % per annum. If you do the math, your present outstanding balances will bifold every 2 years. If you owe your acclaim agenda aggregation P 10,000.00, in 2 years time it will become about P 20,000.00.
The best affair that you could do appropriate now is to pay all your acclaim agenda debt immediately. That is if you accept the money to do so. But what if you owe your acclaim agenda aggregation P 100,000.00 or even P 200,000.00 what should you do ? What if you accept assorted acclaim agenda debts? The afterward are apparently the best accomplish that you could yield in adjustment to rid yourself of this acclaim agenda debt mess.
1.) Get a accommodation with a lower absorption bulk – Some lending institutions and even banks action an absorption bulk of 0.99 to 1.5 % absorption per month. This is abundant lower than what the acclaim agenda companies charge. If you can defended a accommodation with a lower absorption rate, abnormally a abbreviating one (Hard to get by these days, by the way if you don’t accept the aberration amid abbreviating ante and beeline ante or anchored ante this will be discussed in addition post) use the accommodation to pay off your acclaim agenda debt, and boldness to never anytime afresh use your acclaim agenda except if you can pay it aural 30 days. That way you will not be allegation the account interest. By borrowing at a lower absorption bulk you will abbreviate your losses due to interest. If you can borrow from somebody at 0 % absorption (A affluent old uncle perhaps), that would be so abundant better. If you accept several acclaim agenda debts, borrow abundant to pay all of your acclaim agenda debts. This way you can focus on paying alone one debt and one absorption rate. In banking planning this is bigger accepted as “debt consolidation. ”
2.) Defended a antithesis alteration – Most acclaim agenda companies accept a admirable affection alleged “Balance transfer.” If you alteration your antithesis from added acclaim cards they will alone accord you .99 percent absorption per month. This is already a abduct deal. Antithesis alteration are payable in assertive agreement like 12, 24 or 36 months. So let’s say you owe your PS BANK Master Agenda P 100,000.00. If you accept addition acclaim agenda with let’s say CITIBANK and your acclaim absolute with CITIBANK is aswell P 100,000.00, you could alteration your antithesis from PSBANK to CITIBANK. Instead of 3.5 % absorption per month, Citibank will alone allegation you 0.99 % per ages (About 12 % per annum). What Citibank will do is that they will add the account absorption and again bisect that with the appellation that you ambition to account of. For archetype of you ambition to pay off your debt aural a year the ciphering would be: absorption times assumption + assumption disconnected by 12. So that would be 12 % x P 100,000.00 + 100,000.00 / 12 = 9,333,33. You will alone accept to pay P 9,333.33 per month. If you say that you will just pay P 9,333.33 per ages at 3.5 % per ages anyhow that is based on “diminishing interest” (This agency that your absorption goes down if your arch goes down)as against to paying a “fixed interest” you will still end up with P 14,822 in debt at the end of the year. If you pay a anchored absorption of P 9,333.33 at the end of the year you will end up with aught acclaim agenda debt. (I would adulation to column the table I made, but abominably I cannot do it actuality so just email me if you are interested)
But if you pay alone the “minimum” per month, what will appear to your acclaim agenda debt ? You will see that at the end of 12 months you still owe your acclaim agenda aggregation P 92,585.00. (This will be discussed in a altered post) That is why it is not astute to pay alone the “minimum.”
There are several things to bethink about “balance transfer”:
1.) Antithesis alteration is accountable to approval by your acclaim agenda company.
2.) The best bulk you can account of for antithesis alteration is your acclaim limit. Let’s say you accept P 100,000.00 and you acclimated up P 50,000.00 added or beneath you can antithesis alteration about P 50,000.00. However yield note, this is not guaranteed. This is still accountable to approval by your acclaim agenda company.
3.) Accomplish abiding you pay the anchored account installment. In our analogy above, pay the P 9,333.33 religiously, contrarily it will be fabricated accountable to the 3.5 % account interest. Don’t be tempted to pay alone the “minimum” back you will be answerable with 3.5 % absorption over and aloft the 0.99 % interest. (This is bifold accident !)
4.) It is appropriate not to use your agenda if you are application it for antithesis alteration in adjustment to abstain abashing and to accomplish abiding that you can accomplish a antecedence to pay the chapter for antithesis alteration instead of paying added acclaim agenda debts.
5.) Resort to antithesis alteration alone if you cannot account of the aboriginal option. The aboriginal advantage (Get a accommodation with a lower absorption rate) is still the best.