BBB’s top five tips to ensuring financial health
Did you know the average Canadian racked up approximately $3,950 in credit card debt in the third quarter of 2016? And that’s just before the holiday spending kicked in. Now that the credit card statements and bills are piling in, you may be feeling the effects of a credit card hangover. BBB offers the following five tips to help ease the pain of the post-Christmas credit crunch.
Make 2017 a debt-free year and be a calculated consumer with these BBB tips:
- Set up a household budget to guide your spending patterns. Adjust expenses to find extra money to pay down credit card and other revolving debt – even $50 a month will help.
- Choose a method. Debt management experts advise either paying off higher-interest balances first (this is the ladder method of debt repayment) or paying off smaller balances first (called the snowball method, because you build momentum). Either way, you’ll be moving in the right direction.
- Ask for lower rates. Most credit card companies will lower interest rates when asked, especially if you mention a “hardship plan.” Lower rates mean your payments go more toward principal instead of interest.
- Send extra payments. Make at least the minimum payment each month on every account, but send that extra amount to the chosen payoff account. As soon as that debt is paid off, put its payment and the extra toward the next account on your target list.
- Stick to the plan. It can be tempting to use your credit cards again once the balances are lowered, but that will only make it harder to get out of debt, and the process may take much longer. Resist the temptation and keep your eyes on your long-term goal.
For tips you can trust, visit bbb.org.