Personal finance is becoming increasingly more challenging during the pandemic because many of the usual sources of income have been severely compromised. Because of these difficult market conditions, credit card interest rates are now at a new high. This condition occurs because credit card rates are based on a variable interest rate, rates pegged to the prime rate, which is indexed to the Federal Reserve’s interest rate.
Still, there is also reason to hope for a bright future. The economy appears to be improving with the new push by the Biden administration to give consumers direct financial aid, rebuild the infrastructure, and create more jobs to offset the job losses incurred during the lockdown last year.
With the economy on an upward bound, now might also be a good time to revamp your personal finances this year.
A Practical Way to Pay Off All Your Credit Cards
Credit card debt causes financial problems because you rarely notice how this debt accumulates. Since it is simple to qualify for multiple credit cards, people often use their credit cards liberally, and it’s easy to spend hundreds to thousands of dollars with just a flick of the wrist at a cash register terminal.
Credit cards are a form of revolving consumer debt, which means that you should pay off the money you borrow through the cards every month. When you spend more than you earn and cannot pay off your monthly balances in full, then your debt rises at an astonishing rate. One day, you realize you owe more on your credit cards than you will earn at your job in a year.
How do you pay off all your credit cards when you can’t even afford to pay off a single one in full each month? Borrow the money. Get a debt consolidation loan.
After you apply for a consolidated loan from a lender like Hawkeye Associates, then the lender will deposit the money into your bank account. Once you pay off all the credit card companies, you will now only have to make a single payment every month to the lender, an affordable sum that you and the lender agree on after a review of your monthly income and expenses.
Besides the experience of transforming an out-of-control debt into a manageable one, a consolidation loan can also improve your credit scores in a few months. You’ll drastically cut down on your credit utilization ratio as well as show a record of making timely payments to the lender.
Cultivate the Savings Habit
One reason many people do not save is that they believe they need all the money that they earn to pay off all their bills.
One way to test if this belief is true is to create a budget and take a closer look at your fixed and variable expenses to see if you can trim any of these. For instance, you might find that you can shop for lower-cost auto insurance that provides the same level of coverage. You might also find that you can cut down on some consumer spending habits like cooking at home more often than eating out.
Saving a little every month will help you build up an emergency fund. Aim to save up for at least six months of living expenses.
In sum, you can improve your finances by paying off all your credit cards with a consolidated loan and by developing a savings habit.