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Follow on Google News | Lock away your credit card and get out of debt, says DebtSafeBy: DebtSafe These are the comments made by management at DebtSafe (http://www.debtsafe.co.za/) According to statistics from a survey looking at South African consumer spending and saving habits, a little over 50% of the participants indicated that they don’t have a savings plan. “This is concerning because it shows people don’t save… and when they don’t save, they are making debt,” says Wikus Olivier, Debt Management Expert at DebtSafe. One of the biggest reasons people can’t get out of debt is because they are using credit cards for all or most of their purchases. There are some advantages to having a credit card though, as it can be convenient to buy goods without using cash. He adds, “It also gives you access to an interest-free loan if you can pay off the balance before the end of the month. However, if you can’t do repayments each month, credit card debt can increase at a rapid pace.” Olivier says credit card debt is one of the most expensive forms of debt because of the high interest rate. “Take control of your finances and start by setting up your budget. Make a list of all your expenses, including non-essential stuff such as DStv, gym subscriptions or expensive foods. Then go through the list and only keep the essential items – which include car payments, rent or bond repayments, school fees etc. You might be surprised to see how much you can really save by only cutting out a few items from your budget,” says Olivier. “Debt is stressful but there is light at the end of the tunnel! The team at DebtSafe can rescue you to bust debt! If you join our debt review process, we will evaluate your situation, recommend a debt management plan and help you make alternative arrangements with credit providers,” adds Olivier. DebtSafe’s (http://www.debtsafe.co.za/ 1. Stop Using Your Cards The best way to stop using your credit card is to cut it in half and throw it in the trash. A credit card that is still usable WILL get used and all the payments made to reduce the balance can be nullified in seconds. If you don’t want to destroy your credit cards, just put it away where you will not have easy access to it. Remember to do your monthly payments until the balance is paid off. At the same time, cut back on luxuries and spend money only on essentials. When you do pay for them, use cash or your debit card – this will ensure that whatever you buy is within your means. 2. Pay The Minimum Amount You Currently Owe Every Month As you pay the minimum amount you owe each month, not only will your overall balance be reduced, but your minimum repayment will as well. However, if you keep paying a fixed amount per month instead of paying the newly reduced minimum amount, you’ll get rid of your credit card debt more quickly – but this only applies when you don’t use your cards. 3. Overpay Your Minimum Repayment If you find that you have extra cash in a month, resist the urge to spend it and rather put it towards reducing your credit card balance. 4. Use Other Savings To Repay Credit Card Debt With the exception of retirement annuities, consider withdrawing money from an extra savings account to help clear or at least reduce your outstanding credit card debt. Although you won’t have those savings at your disposal after you’ve withdrawn the money, you also won’t be paying extremely high interest on a credit card balance, saving you money in the long run. It is important to note that you should not cut into your emergency savings buffer to repay credit card debt, unless your savings buffer is large enough to support a down payment on the credit card and still be sufficiently large enough to serve you during an emergency situation. 5. Get Help From A Professional If you find that you can’t afford your minimum monthly repayments, it can be hard to get out of debt. Debt review can help you get a handle on your finances so that you meet your financial commitments for all the debt you owe. Visit www.debtsafe.co.za for information. There are credit providers and banks that offer rewards for only using your credit card. Be very careful of this. The rewards you gain will most definitely never be more than the interest and other charges you will have to pay for using your credit card. If you do want those rewards, start using your credit card as a debit card. Transfer funds onto your card and then use it. End
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