Asked by Anonymous
Asked on 06 Jul 2019
I am having problems paying my credit card debt, only able to pay minimum paying. I try applying debt consolidation, but all rejected. What should I do, or how can I reduce instead paying minimum every month?
What is the reasons why the DCP all rejected?
Have you try the debt management programme from CSS?
From what I've been through, I believe you can only apply for debt consolidation when your total credit is equal to 12 months of your salary. I find this to be a stupid rule (for the consumer), but works in favor of the finance companies and banks.
And the rates on debt consolidation are pretty good I believe (maybe in the 4-8% per annum range).
Having said that, the few key suggestions:
1) find ccs to help you and take the debt counselling.
2) In the interim, you need to sort out the debts and find out which cards / credit lines are charging how much interest per annum. You need to find the lowest (preferably 16% per annum or lower). Clear the minimum payments for each card and 2 days before due date.
Before I dash out any further advice, how much credit card / lines debt do you have (in terms of mth of salary)?
The right principles would be
stop adding new debt on the credit cards / lines
clear minimum payments and stop late fees for each of them
if there is no additional fees or interest for doing so, use the lower rate credit lines to clear off the more expensive credit cards first. This could bring the debt down to the lowest interest, and one thing about this "self consolidation" is once the debt is concentrated in one place, you have less no. of minimum payments to make, each with its own potential late fee charge, and this will reduce these additional fees.
I know this isnt the best advice because credit lines still have like 16+% interest rates (google tells me there are some less than 10% per annum), but its better than 26+% interest on credit cards. The lower rate of interest the better.
You may need someone to help you go through and sort out to advice on the best way to bring the debt down, but you definitely need to pay more than minimum sum somehow in order to bring the debt down.
I am looking at the question from quite a few viewpoints so do correct me if I am wrong.
I would like to know, is there a reason why you are only paying the minimum? Is it because you can only afford to pay the minimum? In that case, you need to re-look your spendings and reduce unnecessary spending. In fact, stop spending on your credit card and get a debit card instead. this way, your bank account balance is a hard reality check on your spending.
The other viewpoint is, are you only paying the minimum because you thought you just need to pay only the minimum? Nah. Pay off all balance in full. Don't leave a balance for subsequent months. Not worth it.
Care to share with us why you are rejected? This way, we can chip in a few more viewpoints and advise better.
You should pay more than minimum by cutting down ur expenses or get some side gigs. Very likely your minimum payment might not even enough for interest. Hard to comment without much details.