Seeing Red ? How to Manage Personal Loan and Credit Card Debt

According to MSN Money, the average American household owes more than $6,700 on credit cards. Naturally, in the course of the year this can increase as the interest on the payments grows.

In the UAE, people are using their credit cards more, but the debt trend is towards to personal loans and mortgages. The number of mortgages has risen and personal debt levels have reached an all-time high of DH 422 billion (roughly $114,885 million).

So how can you stop yourself getting in too deep with your loan or credit card?

Check your attitude

The first thing to remember when you take out a loan or use a credit card from HSBC, Barclays or any other bank for that matter,? is that it?s not your money; it?s the bank?s, which means they?ll want it back. Some people use one credit to pay off the debt on another. Avoid this. After all, you?ll still have to pay the money back, so it?s better simply to avoid spending money that you haven?t got.

You?ve got mail!

If you?re going to take out a personal loan or use a credit card, you need to know how much you?re spending. Check your credit card statements and bank statements, keep receipts of everything you buy and note down your expenditure in an Excel document (or log book if you?re a technophobe!). Note ? and meet ? any payment deadlines!

Read the small print

Bit of a clich? but true. Not all credit cards and loans have the same terms and conditions. Make sure you read them before signing for anything or making decisions about repayments. In the long run, the interest incurred on the payments can actually make paying in smaller installments more expensive.

Consolidate your debts

Not by paying off one credit card with another, though. If debts have particularly high interest, you could place them all in one account in which the interest is lower. Another way is to transfer the remaining balance to a bank that offers the same credit card options but more attractive rates and better benefits.

Note that low balance transfer rates are more of promotional value than a regular rate. They tend to last only a short time, so you should check when they end and the full interest rate kicks in before you transfer the balance.

Debt Counseling

If the worst comes to the worse, meet with your bank. They can draw up a payment plan so you can meet your financial obligations. In the meantime, you should consider switching to paying by debit card, since the money comes directly from your own account and you know you won?t owe anything on that particular purchase.

In a nutshell, be sensible when you take out a loan or make a credit card purchase. Remember that you?re spending someone else?s money, and keep track of what you?re spending. Be alert to small print and don?t despair if you mismanage your money. There are solutions, but follow these tips and you can avoid having to look for them.

Note: This is a guest post ? you can read more about guest posts?here.

Source: http://www.peakpersonalfinance.com/seeing-red-how-to-manage-personal-loan-and-credit-card-debt/

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