Credit card debts are a good example of compounding not working for you😣. Not sure what compounding is?
Credit card debts are easy to get into. It starts with one missed payment which incurs you a missed payment fee and interest rate charges on the balance on your account.
Fees and interest charges keep getting added to your debt and then you are charged interest on all of that for the next month, this process continues until you put a plan together to clear your debt🚫💷 and begin that plan. ⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀
Here is what that DIY credit card debt plan looks like:✔
Before prioritising which debt to pay off, the first thing is to figure out how much you can actually put away to pay off your debts per month. The easiest way to do is is by locating your disposable income🔍. This will let you know how much money you have left at the end of every month which you can then put towards repaying your debt.
You don't know what your disposable income is?✔
Well, you don't have a budget or do you? (so in your case, Get a budget tracking tool or just sync up your accounts with Huuti - we show you your disposable income per month and help you put money away to pay off debts whilst earning interest in a savings pot). ⠀
Prioritize which debt you should pay off first.✔
Debts with compound interest are usually the worst and you might want to prioritize these first. But then you have to consider if to pay off your high interest debts or low balance debts first, so should youuse the debt snowball or debt avalanche repayment methods? Ideally the high interest debts seem like a good choice but some people prefer the feeling of accomplishment from clearing off a low balance debt.
You can use our credit card repayment plan calculator to figure out which method will give you the best savings in the long run and put your DIY plan to work. ⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀
In some cases you can transfer your debt to a cheaper credit card or combine all your loans into one big consolidation loan which is cheaper. It's hard to know which is the best option and what your options are, so we built a platform that shows you all your debts, what your options are and how much you will save with each.