The cost of that debt is invisible because we all accept there are minimum payments each month coming out of our account and it revolves. Do you notice the interest on your credit card? I certainly don’t!
Whilst we gradually pay credit card debt off, we also tend to run it back up again. The one-offs happen so frequently, we become perpetual revolvers. Unless, you are one of those amazingly disciplined people who manage to pay it off each month.
The interest cost on $15,000 at 20% per year is $3,000 of after tax income or $250 per month. That’s more than an annual gym membership!
Now compare that cost to putting your debt into a debt consolidation loan, amortising over two years. Our average borrower rate is 12.50%, but if your credit score is super, you could get as low as 9.95% for a 2 year loan. On our average rate of 12.50%, you would pay a total of just over $2,000 in interest on a 2-year loan, that’s a saving of around $2,000 a year! Plus, you would have no credit card debt. What could you do with an extra $2,000 a year?
Use the psychology of ZERO to get back control
More than that, it resets your credit cards to zero. There is a lot of psychology around ZERO. It’s much harder to justify spending when you’re at ZERO than when you’re already $15,000 in debt. I know from personal experience. Resetting yourself, and putting a plan around debt-reduction works.
If you are a homeowner, then chances are you won’t put your credit card debt on the mortgage and you don’t really want to as that is a 30-year debt. Using the house as an ATM for consumption is not the smartest idea and it just hides our sins.
If you’re ready to start making some savings and get back to ZERO, a debt consolidation loan could be the way. We currently have $1m to lend out on the peer-to-peer platform for credit card debt-consolidation loans. If you have good credit you’ll also get a low interest rate and that will save you some serious coin as well. You can apply and do everything online – even right now.
Best of all, with peer-to-peer you not only get a great deal but we’re also giving our investors a great return on their cash as well. Everyone wins!
Squirrel Money – debt consolidation loan
You can apply for up to $50,000 to help you get on top of your debts, and with rates starting at just 8.95% p.a. you’ll be back in control in no time.
Benefits of a Squirrel debt consolidation loan:
Take back control!
This article was originally posted on 21 June 2018. Some details have been amended, and republished on 9 July 2018.