It’s kinda difficult to live a frugal life when you’re either in debt, or sometimes you have to rely on debt to get you through a tough spot, but that’s only if you continue to pay interest on the credit you use.
Sometimes, you can’t avoid taking out taking advantage of loans to people with bad credit when you need a new washing machine or paying the mechanic with your credit card when the car unexpectedly stops working. However, you can stop paying over the odds for these things. Here’s how:
Transfer Your Debt to a 0% Card
If you have outstanding debt, or you’re forced to take out a loan at short notice, due to the immediacy of the situation, as soon as you can, apply for a 0% balance transfer card, and you can concentrate on paying off the money you borrowed without the burden of interest.
If it’s a loan you’re looking to remove the interest from, then you’ll probably need a 0% money transfer card because many loans don’t allow you to pay off the balance with a credit card. The money transfer card will allow you to borrow money from your credit card interest-free to pay off your loan and stop further interest accruing.
Use a 0% Purchase Card
If your credit score is good enough to qualify you for a 0% purchase card, should you need to make any big emergency purchases in the future, applying for one of these cards would be a good idea. It will allow you to pay for whatever it is you need without accruing any interest for several months, allowing you, through frugal living, to pay off the balance before any interest is added. You will need to make a note of when the interest-free period ends and pay it off before then to benefit though.
Pay By Direct Debit
If you’re one of those people who are confident that you can use credit to your advantage, always paying off your card before the end of the month, it’s always a good idea to set up a direct debit, so that you don’t forget to make a payment because you have something else on your mind at the time.
If you can’t or don’t want to set up direct debits for your loan and credit card payments, at the very least set up a regular Google calendar or smartphone alert to remind you when you need to pay, so you don’t get stuck with any interest due to a simple oversight.
Build Up an Emergency Fund
Of course, the best way to never have to pay interest again is to be in a position where you don’t need to use credit at all. This is where frugal living really comes into its own. If you are able to cut back on your expenses to the point that you have a surplus in your budget every month, you can start building your own emergency fund, which should cover most of your unexpected expenses when you need it to.
Be Careful Withdrawing Cash from ATMs
First of all, you should never withdraw cash from an ATM using a credit card. If you do this, you will be charged interest from the second that money reaches your hands until you’ve paid it off and the interest will typically be higher than it is for purchases made with your card.
Another thing you need to consider is that, should you go abroad, if you use a debit or credit card to withdraw cash, you might be charged a fee. This isn’t really a form of interest, but it is an extra payment for access to cash (often your own) that you can easily avoid.
Speak to a Debt Counsellor
If you have debts and you’re struggling to pay them off, talking to a debt counsellor could be a great idea. Often, they can help you negotiate deals with your bank ad other creditors whereby the interest on your repayments is suspended, so you have some breathing space and the time to work through your debt issues for a better financial future. Just make sure that you seek the advice of an accredited free of charge counsellor – you don’t want to end up in a worse situation, after all.
Paying interest might be the norm for a lot of people, but it definitely isn’t essential, and if your aim is to live a more frugal, financially stable life, it certainly isn’t advisable.Use the tips above to ensure you never have to pay interest again.