It is not always that easy to keep track of your finances on a daily basis and that can mean that debts can start to creep up on you and before you know it you have a stack of bills that need paying all at the same time.
There are short term measures that you can take advantage of such as using someone like MoneyBoat.co.uk, as long as you understand the need to repay the amount over a matter of just a few months.
Your main priority should always be to try and reduce your debt load and get your finances back on track in the best way possible, so here is a look at a few options.
Beware credit cards
As many people discover, credit cards debts can sometimes accumulate all too easily and if you don’t keep a firm eye on your spending and only pay the minimum amount back each month, your credit card debt is not going to go away very quickly at all.
Paying your credit card debt back faster is one of the best debt-reduction strategies you can employ, as the interest rate charges on many cards is often higher than some other conventional loans.
You should always try to pay more than the minimum required payment each month and you need to be aware that depending on when you took out the card, your debt could actually increase if you only pay back the minimum sum required.
The regulations changed back in 2011 and now the card company needs to request a payment that covers interest, charges and a minimum of 1% of the outstanding balance. This change definitely helps if it applies to a card that you have but you should definitely aim to pay even a small amount above the minimum if you can, as it can make a big difference to your debt levels.
Take a look at the cost of your cards
If you have a number of credit cards and store cards, there is a fair chance that some of them will have higher interest rates than others, so you need to take a look at the interest rate being charged on each one.
If you have a store card or credit card which charges a higher rate of interest than one of the other cards you currently have it would make sense to formulate a plan of action whereby any overpayment you are able to make beyond the minimum each month, should be allocated to the most expensive card.
Doing this will enable you to repay the most expensive card off the quickest and by prioritizing your credit card and store card debts in this way, you will save on some interest charges over time by clearing off your most expensive debts in order.
Another good tactic to consider provided your credit rating allows you to apply for further credit cards, is to take advantage of a balance transfer offer.
Some credit card companies want to entice you with a 0% or low interest rate deal that could last from a couple of months to a year on average. Applying for the card and transferring your existing balance from another card that is charging a high interest rate could allow you to make a significant saving.
Whilst transferring your balance is not reducing the capital sum you owe in the first instance, a 0% or very low introductory interest rate will have the effect of reducing the time it will take to clear your balance, especially if you maintain the same monthly payment and pay more of the capital sum owed off each month.
The amount you save in interest charges with this tactic will vary according to how the card balance is you transfer but for example, if you transferred a £5,000 balance on an 18 month zero interest deal, it would allow you to save £600 in interest charges.
Prioritize your debts
It should always be remembered that any sort of credit card borrowing is ultimately expensive even if you make some short term savings and if you have any spare money available, it would always be a shrewd move to pay these balances off as quickly as you can.
If you are struggling with your finances, always make sure you prioritize your debts and that means paying your mortgage payment each month if you own your own home so that you don’t end up losing your property.
Repaying debt does often feel like lifting a weight off your shoulders so try to formulate a plan so that you get your finances in better shape and save yourself some interest charges.
Jerry O’Donnell is a personal finance consultant with a background in commercial lending. He enjoys sharing his research and industry insights online. His articles mainly appear on money and finance blogs.