Have you got credit card debit that is weighing you down? The EOFY year a great time to look at where your debts are and how you can start lowering them.
Earlier this year I shared one way to smash down your Credit Card debt and in case you missed it you can find it here; ‘Smash your credit card debit’
I have another way you can smash your credit card debit through consolidating it however there are some important things you need to consider when you do to make sure you are actually saving time and money.
Firstly let me explain how it works, most credit cards have an interest rate of above 12% in fact a lot of cards charge a lot more where as your home loan interest rates are currently sitting between 4-5% depending on the loan type and who you are with.
The idea of consolidating is you repay the whole Credit card debt with an increase off your home loan so you can save yourself 8% or more in interest and get the balance paid off in a reasonable time frame.
There are some important things to consider when you do consolidate to ensure you are saving your self money and this is,
- You must close the credit card, or at least lower the limit to something you can manage to repay within the interest free period otherwise you will find the balance increases again and you are worse off
- You should look to increase your repayments to ensure you get the additional funds paid out within a shorter time frame so you aren’t paying it off over 30 years
- Only look to consolidate if you have more than 20% equity in your loan, otherwise you will be charged Lenders Mortgage Insurance which will cost you more
- When you look to get your increase consider other lenders that may have a special on that can save you even more money
This option can also be used to consolidate personal loans and make your banking more convenient with only one payment coming out rather than multiple each month.
Still not sure this is the right option for you? Contact me today and I can work out a plan that fits your needs.