Too many overdue payments to clear, too little time? Being in debt and juggling multiple outstanding loans like credit card, overdraft, personal and student loans, mortgages and car payments can be stressful – but all it takes is the right strategy to help you manage your debt.
While paying off all your debts is a long-term goal, you can start planning your debt management journey today with these 4 tips:
1. Set clear goals for paying off your debts
The first step to managing your debt is to find out your current debt situation. To get an overview of your outstanding and current credit scoring, purchase a credit report from Credit Bureau Singapore. From there, you can then decide on how many years you should give yourself to pay it off – but be realistic and patient, it could be 5 years, 10 years or even longer.
2. Consider debt consolidation or refinancing
Debt consolidation is a method of rolling all of your loans into one single, lower interest payment. There are two primary ways to consolidate your debts: a debt consolidation loan and a credit card balance transfer.
A low-interest debt consolidation loan can be beneficial to consolidate multiple high-interest loans such as credit cards and personal loans. This can help to lower your accumulated monthly instalments and interest rates.
For credit card bills, a good option to consider is a balance transfer – which means transferring your existing credit card balance to another credit card or bank with a lower interest rate, such as CIMB Balance Transfer, which offers interest rates from as low as 0.5%* per month for 6 months.
If you have a home mortgage, consider refinancing your home, which can lower the interest rates.
3. Set payment reminders to stay on track
Avoid being stuck with additional charges such as late payment fees by setting up a payment reminder on your phone or computer.
4. Which debt should I pay off first?
Come into some extra funds and overwhelmed by which debt to clear first? Here are two strategies you can use:
You can pay off the loan with the lowest balance – thus coming closer to clearing in totality at least one loan, while maintaining the minimum payment amount on other loans.
You can focus on the loan with the highest interest rate, and thus lowering the interest on the outstanding, and continue paying the minimum amount on other loans.
But which option? The key is to choose the solution that works for your lifestyle and keeps you motivated to continue your debt management journey.
The most important thing to remember is that clearing your debt can take a while, so it is important to stay on track and consistently practice good funds management habits to help keep your budget in order.
Important Notes & Disclaimer
*Your processing fee will be determined based on your approved Balance Transfer Tenure. Terms and conditions governing the CIMB New-To-Bank (NTB) Balance Transfer Loan Promotion & CIMB Existing-To-Bank (ETB) Balance Transfer Loan Promotion apply.
This article is brought to you by CIMB as part of our ongoing efforts to raise the level of financial literacy amongst Singaporeans. Financial knowledge and understanding are key to making well-informed and meaningful financial decisions that will improve everyone’s well-being. This in turn, achieves CIMB’s purpose of advancing customers and society.