Australian Financial Solutions» Australian Debt Solutions Blog – Australian Financial Solutions

Watch out for increasing card rates and get out of credit card debt

Bang Online — Wed, 30 Jun 2010 05:10:23 +0000

It is extremely easy to get a credit card and just as easy to get into credit card debt. With the current card rates increasing, paying off credit card debt has become an impossible mission.

Purchase and cash advance rates on some credit cards, particularly some low rate credit cards, have gone up by more than the official cash rate this year. Card issuers have also been changing their low-rate or zero-rate balance-transfer deals, shortening the periods for which the low rates apply. Many cards have purchase rates over 20 per cent now, with cash advance rates even higher!

The current high interest rates make it difficult for people to manage debt — especially if only making the minimum payment. In fact, just making minimum payments can make even the smallest balance over a decade to pay off and thousands of dollars in finance charges. It’s no wonder debt reduction seems so hard. Here are a few basic steps that should help you pay off your debt sooner, with less interest, and improve your credit score in the process.

List all your credit cards and include the outstanding balance, interest rate and minimum payment
Order the cards on the list so that the credit card with the highest interest rate is at the top, and the lowest is at the bottom.
Total the minimum payments: this total will be your absolute lowest monthly payment. But you should pay more than the minimum in order to repay the debt quickly.
As your payments come due, pay the minimum on each card except for the one at the top of your list. That one has the highest interest rate and is costing you the most money. Whatever additional money you can pay, apply it to that card.
Continue this process until the first card is paid off. Repeat this process until all cards are paid off.

If you are struggling to manage paying off multiple credit debts from numerous providers then you might consider Debt Consolidation. It is one way to consolidate all your debts into one easy to manage repayment. Australian Financial Solutions can assist by you by providing an independent assessment of your financial position to determine whether debt consolidation is right for you. Contact us now!

Debt consolidation: what are the advantages and risks?

Bang Online — Tue, 15 Jun 2010 03:06:47 +0000

Do you have a problem managing your debts? Are you struggling with a range of debts such as credit cards, personal loans, car loans, store loans? Wouldn’t it be handy to roll all your loans together into a single repayment ? Have you thought of debt consolidation? Debt consolidation enables you to combine two or more loans into a single repayment.

What are the advantages of debt consolidation?

Having all of your debts and credit cards rolled into one big debt can be an attractive option especially when one considers the savings that can be realised:

Save money by reducing the amount of interest you pay
Reduce repayment periods
Improve personal cash flow
One easy to manage repayment

What should you consider before choosing debt consolidation?

Match debt consolidation with a change in behaviour:

Debt consolidation may provide significant relief. However, it is not going to magically solve your financial problems. As new debts arise the likelihood of defaulting on these payments increases.

Know the risks of debt consolidation:

Debt consolidation can bring you substantial benefits but can affect your credit score. Your smaller debts and credit cards will have built up a certain amount of credibility. When all of your smaller accounts and credit cards are closed in favour of a debt consolidation loan, your credit history is shortened thereby reducing your credit score. Also, having additional credit enquiries on your credit file reduces your credit score; try to minimise the number of attempts you make to consolidate.

Whilst it’s important to understand the risks involved with debt consolidation, depending on your personal circumstances, consolidating your credit cards and other debts into one repayment may provide significant benefits in terms of savings and reducing the repayment term. Australian Financial Solutions can assist you by providing an independent assessment of your financial position to determine whether debt consolidation is right for you.

When Debt Gets Personal, the Impact of Recession

Bang Online — Wed, 14 Apr 2010 07:59:20 +0000

With unemployment figures set to rise and a slowing economy, many Australians may find themselves having problems repaying debt. A recent Dun & Bradstreet survey revealed many people expect to increase their debt amounts by using credit cards and other forms of credit, with credit highest amongst the 18-34 age group. A drop in property prices, job losses and dwindling investments are all contributors to a rise in personal debt.

If you’ve recently become one of the many Australians struggling with debt, its important to know what your options are. If your struggling with credit card debt, the best solution for you may be debt consolidation or loan refinancing. This brings all your debt repayments under one regular payment, making it much easier for you to manage. You may even find that you can lower your interest rate or monthly payments.