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7 Must Follow Steps to Getting Debt Free

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

Step 7

A Bad Case of Affluenza

Credit File

Ode to a Debtor

Payment Protection Insurance: Peace of Mind - Until You Make a Claim

 

7 Must Follow Steps to Getting Debt Free

  • Step 4 - Use Savings to Pay Off Expensive Debt

    • With some credit card and store card rates at thirty per cent plus, there is no need to pile up massive interest charges while you earn a piddling few percent on your savings account.

    If you’re a typical tax payer, paying 20% on the interest you receive on your savings, then that piddling few percent is going to be even more pitiful.

    This means that the interest you pay on your credit cards, loans and overdrafts can be 20, 50, 100 times more than you are earning on the exact same amount stuck in your savings account.

    Why not let your savings really work for you, by using it to pay off some of that costly debt.

    Doing that, is like earning the rate charged by your credit card company tax free.

    Or looking at it another way, for a an average taxpayer using his savings to pay off a debt incurring interest at an APR of 15%, it's like earning 18.75% on his savings before tax.

    And for a taxpayer paying 40% on his savings, the benefits look even better.

Rate Charged for Credit
Equivalent Savings Rate for
a Basic Rate Taxpayer
Equivalent Savings Rate for
a Higher Rate Taxpayer

6%

7.50%

10.00%

10%

12.50%

16.67%

15%

18.75%

25.00%

20%

25.00%

33.33%

25%

31.25%

40.00%

30%

37.50%

50.00%

    And this is with zero risk to your money. No need to scour the financial pages for the inside scoop on the next guaranteed-to-double-your-money investment opportunity.

    It is as easy as paying money from one account to another.

    If you have money idling in accounts which pay pathetic interest rates, get that money working for you. Use it to get rid of that expensive cash-draining credit and get debt free even faster.

 

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