Strategies for Effective Debt Management and Avoiding Accumulated Interest

Five Ways to Better Manage Your Debts

Managing debts effectively is crucial as accumulating interest over time can increase the total amount owed, thereby making repayment more challenging. To avoid getting deeper into debt and find a pathway out of it, consider implementing these five strategies.

1. Prioritize Paying Off High-Interest Debt

Credit cards typically carry high-interest rates that quickly accumulate if payments are missed or only minimum amounts are pd. Late or skipped payments further compound this issue by adding interest to previous interest charges. If you're juggling multiple loans, focus on paying off those with the highest interest rates first.

2. Consider a Consolidation Loan

When faced with multiple debts and your total unsecured liabilities exceed 12 times your monthly salary, consolidating them under one loan can offer relief. This strategy simplifies debt management by reducing the risk of accruing additional fees due to missed payments on each individual account. It also avoids the stress of overlapping payment deadlines.

3. Engage with an Expert

If you're overwhelmed with debt and unsure how to proceed, seek advice from fris or family members who have experience in credit management or banking. Credit Counselling Singapore provides assistance through their Debt Management Programme; experienced counselors offer guidance on financial literacy, mental health support, and more.

4. Negotiate with Your Creditor

Communicate your situation honestly and request adjustments for a more affordable repayment plan. Ask if late fees can be wved or if the payment schedule can be adjusted to align better with your income cycle.

5. Avoid Taking on More Debt

Desperation often leads debtors to seek additional loans, which can only exacerbate their financial strn over time. Instead of getting further into debt, focus on paying off what you already owe before considering new funds.

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If overwhelmed by payments to credit cards or other unsecured debts, join our weekly Debt Management talks through Zoom or in-person. These sessions will provide insights on communication with creditors, common collection actions, debt settlement options, and the benefits of Credit Counselling Singapore's programs.

Contributed by Credit Bureau Singapore

Published: February 24, 2023
This article is reproduced from: https://ccs.org.sg/articles/ccs-230224/

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