Step 6 - Switch to Cheaper Rates
Chances are you won’t be able to clear all your debts in the
next few months, especially if you are being forced into making
minimum payments on one or more debts.
What this means is that you have got to shop around for a lower
interest charge on your debt. And if you are using credit cards, then
it means you will probably have to "Rate Surf".
Rate surfing is the practice of moving from one cheap rate to the
next. As there are plenty of cheap credit cards balance transfer
deals at the moment, switching some of your debt to lower rates
should be possible.
You can currently obtain balance transfer rates of 0% to 6.9% APR
which usually last about five or six months. Deals which last until
you clear the transferred balance in full are in the 5.9% to 6.9% range.
Even for six months it’s a hell of a lot better than paying 13%,
let alone 30%. After the special offer rate they do revert to nasty
rates in the high teens, so don’t be caught napping. Which is
where the "surf" aspect comes in.
But whatever approach you take, reducing the APR by 10% on a
£5,000 debt is still saving you £250 over six months.
That’s £250 that would have gone in interest charges but
instead is £250 of debt repaid.
Once you make that balance transfer you should slice and dice your
old card. There is no need to leave it lounging around waiting to
build up new debt.
Remember: Clear the Card, then ... KILL THE CARD!
