This debt reduction method reduces the amount of finance charges you pay to the lowest possible level using credit accounts that you already have at your disposal. Consolidate debt using your current low interest credit cards’ unused credit amount to pay off your credit account with the highest interest charge. This process will help you obtain debt-freedom in the not-so-distant future.
The highest interest revolving charge accounts are normally those issued by retail establishments because most of them charge you around 25% interest for every dollar that is put on the account when it is not paid off in total when the bill is due. This means the financial institution is charging you 25 cents on each dollar that you let revolve (rollover) from month to month. That’s why it normally takes so long to pay these credit cards off when you make only minimum payments. Nowadays, you also have to be aware that many financial institutions that provide revolving charge cards will charge you much more than the original interest percentage when they believe you have become a poor financial risk. Some are charging upwards of 30% interest, which is 30 cents on every dollar that revolves from month to month.
It is not good for your financial health to have years of interest payments, especially high interest. This is why you should quickly get your financial affairs in order to pay off credit balances and develop a mindset to refrain from using them, unless you have the money saved to pay off your entire charge when the bill comes due. People that have been undisciplined in using credit cards in the past should cut the cards up and close the accounts no matter what others say about it ruining their credit score. If they don’t cut them up, the debt demon will continue to guide them into overspending and their credit score will wind up being terrible anyway as their debts grow larger, hampering their ability to pay their bills on time each month.
When you don't have enough available credit on a low interest credit card to pay off all your high interest credit accounts, then apply for a low interest consolidation loan at your financial institution. Consolidation loans are normally closed-ended, which means whatever is paid off is not re-usable. This is good when your past has shown reckless undisciplined spending. Do not consolidate any of your accounts that have an interest percentage that is less than the consolidation loan's interest charge unless overall the consolidation loan interest is substantially lower than the average interest rate you are paying on all your current accounts that would be consolidated.
Before using this approach, it's best to call retailers to close revolving accounts and cut up the cards so you won't be tempted to use them again. Besides, retailers’ accounts do not normally allow you to balance transfer outstanding balances of other accounts onto their accounts. They are issued to engage you in buying more of their products without regard for what will truly be financially best for you and your family.
Do not listen to advisors who encourage you to keep credit cards when past history shows you will remain steeped in debt. As you faithfully begin to pay your bills when due your credit score will rise over the next few years enabling you to obtain a low-interest mortgage and great home and auto insurance rates. In fact, you won’t really need the good credit score because the provision that comes from using biblical financial principles will bring you all the resources that are best for you and your family.
Please pray for this ministry and email any questions. May God bless you richly as you follow His plan!!!
Deuteronomy 28:12, Proverbs 22:7, Luke 16:8-12, Romans 13:8
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You can find books authored by Randy and Karen Parlor at www.Amazon.com.
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