Credit Card Advice

There’s nothing unique about Irish credit card debt compared to credit card debt elsewhere in the world. It is true that Ireland has suffered more than other countries in the worldwide recession, but even with a new economic reality, getting rid of Irish credit card debt is similar to getting rid of any other debt: it is a matter of commitment and hard work.

Most people, particularly if they travel, cannot do without a credit card. They can, however, do without eight or nine credit cards. Most money experts suggest having two credit cards, both of which provide a backstop in times of trouble. For those with multiple credit cards, there are several options for paying off your debt.

One option is transferring debt onto a new credit card with a low introductory interest rate and putting all your effort into paying that debt off before the “teaser” interest rate expires. It sounds like a great idea in principle, but if you can’t pay off €4,000 indefinitely with 14.9% interest, it isn’t that much more likely you’ll be able to pay it off in the 10 months or so that you have the low rate on the new card.

There are two approaches to paying off credit card debt. One is to pay off the one with the highest interest rate first. It makes sense that you’d want to pay off your most expensive debt before paying off your cheaper debt. If you choose to do this, and the card with the high rate has a big balance, you can certainly do it, but it will take serious discipline. If you can look at your statements online and watch as the balance falls, however, you can really draw motivation from that to keep working on the debt.

Another technique for paying off credit card debt is the “snowball” technique. That means you pay off your smallest debt first, then close the account, on the theory that you’ll be really chuffed at having got rid of an entire card’s worth of debt. Repeat with the new smallest debt, etc.

Either technique will work, and there is discipline involved in both. Which method you choose depends on your particular personality and what motivates you.

Consolidating loans may sound like a great way to get out of debt, but human nature being what it is, the sense of relief causes a lot of people to run up a whole new cycle of debt. In other words, borrowing your way out of debt is usually counterproductive.