How much of that money you overspent over the holiday period went to your credit card?
Data from research and comparison site Finder showed New Zealanders are now using their cards to process $4 billion of purchases a month. Reserve Bank data shows that New Zealanders were carrying $7.37b in credit card debt in December 2019, and we can only imagine that spending went up in the December/January holiday period.
This is not a pretty picture.
Using your credit card and not paying your bill on time not only inflates the cost of things you buy, but also mean that you are losing your hard earner money to high interest rates.
Did you know that your mortgage could help you ease the squeeze?
Your mortgage could be the perfect tool to tidy up personal loans and credit card debt and get rid of high interest rates.
As an example, let's say you have a $20,000 debt on your credit card. You could end up paying an extra $3,800, if your credit card is on a 19% interest rate. However, if you were to consolidate the $20,000 debt into a home loan with a 5% rate, you would only be paying $1,000.That's a $2,800 saving, just by being smart about managing your debt!
Ideally, once you have consolidated your debt, you should increase your repayments to cover both your home loan and the extra debt you added in. Make use of the lower interest rate, but don't let that be an excuse for delaying the goal of paying off your mortgage.
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