(This article is brought to you by AXA Insurance)
A best rate type of personal loan should be considered as one way of clearing debts. With a lower APR, a best rate personal loan is a better option than payday loans, which, though often easy to obtain, normally include high interest on even relatively small loans. Joining a credit union can also help you get a loan with fair interest rates, as they are not allowed to charge more than 2% monthly interest.
Improving your credit score is one way of dealing with debts in the long term. If possible, don’t just pay the minimum repayment on your credit card. A larger than necessary repayment suggests that you are less likely to be struggling financially, and you’ll improve your credit score as a result – which will then mean that you will be more likely to be accepted by a lender.
Keep an eye on APR rates on your credit card. If the increase is too high you have the option to cancel the card in a given time period. You will then be able to pay back the money you owe at the rate before the interest was increased. There are some credit companies that offer deals where there is no interest involved for around the first two years.
Use your savings to pay off debts. You may be saving money just for a holiday or for Christmas, so you will need to balance which is more important to you. If the debt is only a few hundred pounds you could put back the holiday by a month or two, or cut down on Christmas spending. In the case of the latter, Christmas can still turn out to be more enjoyable than a Christmas where you’re worrying about debts.
Increasing the size of your overdraft can help you resolve some of your financial issues in the short term. You may need to pre-empt this anyway if you think that you are going to exceed your overdraft limit in the near future. At least if you do increase your overdraft limit, that is one less thing to worry about, and it can free up money somewhere else.
There is free and independent advice available for anyone who is struggling to pay off their debts. You should never feel that you have to pay for a company to manage your debt, as there are charities that specialise in debt advice.