debt

7 Financial Goals to Set in 2020

Investing a little bit of effort and time in outlining your financial goals will help you to improve your financial situation in 2020. This will also help you to develop a sound long-term strategy for your financial future.

Do Your Taxes Early

Like it or not, the tax season is coming up quickly, and it pays to file your taxes before the deadline. Reporting your eligible expenses and income is far from fun but procrastinating will make it more stressful. The deadline for filing in Canada is April 30, 2020. Early filing also ensures that you receive credit and benefit payments such as the working income tax benefit, GST/HST credit, Canada child benefit, and guaranteed income supplement. Eligible taxpayers are also entitled to claim the Climate Action Incentive if living in New Brunswick, Ontario, Manitoba, and Saskatchewan.

Getting your taxes done early is easier if your income sources include:

Grants
Bursaries
Fellowships
Scholarships
Support payments
Social assistance
Employment insurance
Disability insurance

Completing your tax returns is not as easy if you have rental or business income, are self-employed, have declared bankruptcy during the previous or current year, or have capital losses or gains. In this case, it is important to get your taxes done early to ensure that you have plenty of time to gather all documents and pay taxes that you owe.

To file your taxes, you will need to provide information such as your home address, banking details, number of children, and marital status. You should also report income in the form of benefits, investments, and self-employment and employment income. Claim tax credits, expenses, and deductions to lower the amount you pay. You can complete your tax returns in different ways, including by phone, on paper, and by software.

Fix Your Credit

The first thing to do is plan to get your credit in check regardless of how much you owe. Start by listing all debts that you owe, including due dates, monthly payments, total amount, and creditors. Make sure you update your list to check on your progress and see where you stand. Making timely payments each month is obviously a must. Late and missed payments will affect your credit score and will make it more difficult to pay off your debts. If you have multiple debts, you may want to set alerts to help you avoid late payments. It is also important to decide which debts to pay off first. If you have multiple credit cards, start with the one that carries the highest interest rate. Make sure you make the minimum payment on your other accounts to avoid penalty interest and to stop your debt from growing.

Create a Financial Plan

Setting a budget will help you to stay focused on your financial goals and get control over your money. There are other benefits to setting a budget such as organizing your savings and spending and paying off debt faster. The first step to creating a budget is to look at your income or how much you can afford to spend on a monthly basis. Start by listing different sources of income such as your salary, wages, alimony, and benefit and credit payments. Other sources of income include rental and dividend income, royalty and interest income, and capital gains. Once you get an idea of how much money is coming in, you have to look at your expenses, including fixed and variable expenses. Examples of variable expenses include car maintenance, home repairs, and groceries. Fixed expenses, on the other hand, include things like credit card and loan payments, car insurance, utilities, rent, and service payments such as cell phone, Internet, and cable TV. Compare your income and expenses to see whether you need to adjust your spending to meet your expenses and save enough to achieve your goals. You can either try to increase your income or cut back on both fixed and variable expenses.

Settle Bad Debts

Paying off bad debts will help you to improve your credit score. Such debts are in collections because you are unable to pay them back. The best thing you can do is settle or pay the full outstanding balance. First contact your debt collector and try to negotiate a settled payment in exchange for deleting the account from your report. Offer an amount that is smaller than what you owe. If this doesn’t work, then offer a full payment to get the account removed.

Make a Long-term Savings Goal

The first step to making a savings goal for yourself is to actually name your goal. Examples of goals include creating an emergency fund, saving to pay off debt, and saving for down payment, your kid’s education, or retirement. Examine your goals to decide whether they are long-term, mid-term, or short-term. Long-term goals such as retirement and college education require a lot of money and careful planning and take several years to achieve. Mid-term goals such as paying off credit card debt or buying a new car do not take as long to achieve but certainly longer than short-term ones. Short-term goals, on the other hand, take one year or less and include things like buying a new washing machine or going on vacation.

Find a Financial Planner

If you lack basic knowledge of debt management, investment, and financial planning, you may want to use the services of a financial advisor. Advisors have expertise across a wealth of topics such as tax strategies, wealth management, insurance coverage, budgeting, and saving. They can help you to develop a financial plan and stick to it as to achieve your long-term and short-term goals. Your advisor will help you to choose from different types of insurance coverage such as disability, term life, and long term care. You may be asked to fill in a detailed questionnaire to help assess your financial situation. The questionnaire typically includes questions about your expenses, sources of income, assets and liabilities, and future income and retirement income sources. The answers will help your advisor to assess your financial strength and risk tolerance. The financial plan that you develop with your advisor will be based on your liquid capital, assets and liabilities, and net worth.

Ready to Invest?

Finding new companies to invest in can be tricky, especially if you have little or no experience. In this case, you may want to invest in companies across different sectors in S&P, including health care, consumer discretionary, industrial, consumer staple, energy, and material. Other sectors to look into are utility, real estate, telecom, technology, and financial. Choose companies that are good for growth or value investing. The approach that you choose to include companies in your portfolio depends on your financial goals and risk profile. If you have a low-risk profile, then consider dividend stocks. Growth stocks are a good option for those who wish to invest in long term growth while value investing is a preferable choice if you are looking for stocks that are trading below their book or intrinsic value.

Financial Secrets Nobody Told You About

By Sam 5 Comments

Thinking out of the box is the key to achieving financial freedom and accumulating wealth. Most people believe that earning a college degree and working a well-paid job will help them to earn a good living. Here are some secrets that well-to-do people rarely share that will help you to attract wealth energy.

Budgeting to Build Your Net Worth

Budgeting is the first step to financial stability and the first technique to master. Budgeting means tracking your spending over time to see whether any money is left after covering all expenses. There are bills and expenses that most people pay on a monthly basis – debt payments, groceries, gas, water, and other utilities, transportation, and housing. In addition to regular expenses, there are also less predictable or unexpected expenses such as insurance coverage, gifts, vacations, and home and car repairs. They may reach 10 to 30 percent of your monthly expenses. Budgeting also involves adding up sources of income such as bonuses, salary, and wages. What is left after deducting your total expenses from your income is money that you can use to create an emergency fund or invest to build wealth. If there is no money left to invest and increase your assets, you will never be able to build a healthy net worth.

Increasing Your Net Worth

Budgeting is only the first step to achieving financial freedom. The next step is to focus on your net worth which is the difference between the total assets that you have and your liabilities. Examples of assets to include are tangible assets such as land, inventory, and personal possessions, including collectibles, jewelry, electronics, and vehicles. There are also non-physical or intangible assets such as franchises, software, patents, and copyrights. Personal assets are intangible and tangible and may include things like savings and retirement accounts, insurance, and works of art. Liabilities, on the other hand, are obligations or debt that you owe. Liabilities include things like vehicle and student loans, credit card balances, and mortgage payments. One way to increase your net worth is to eliminate debt and another is to buy assets that generate income. Such assets are, for example, bonds, certificates of deposit, money market savings accounts, and single family rentals.

Choosing the Right Investment Instruments to Build Net Worth

The key to building a healthy net worth is choosing the right investment instruments based on factors such as your investment objectives, age, and risk tolerance. There are advantages to being young such as fewer responsibilities, higher disposable income, and higher risk tolerance. If you are in your 40s, there are advantages as well, including more experience and better ability to identify and deal with problem situations. Your investment objective is also an important consideration, whether it is saving for retirement or making high profits. If your goal is to have some type of passive income or to keep your money safe, then investing in low-risk instruments sounds like a good idea. Interest paying bonds and fixed deposits are two options to look into. Bonds can be purchased from different establishments and institutions such as local and state governments, small and large companies, and foreign companies. Depending on the entity offering bonds, there are different types, including foreign, municipal, agency, treasury, junk, investment grade corporate, and corporate bonds.

Fixed deposits are offered by banks and feature higher rates than standard instruments such as savings accounts. Certificates of deposit also pay higher rates and come in different types such as liquid, IRA, jumbo, and traditional. If you have a higher risk tolerance, you can choose from a pool of high-risk options such as contracts for difference, equity investments, spread betting, and venture capital trusts. Investing in biotechnology stocks, for example, is risky, and the reason is that up to 90 percent of experimental drugs and therapies fail. Land banking is also a risky investment because the plots on offer are usually too small, brownfield, or green belt, for which planning permission has not been obtained. Other high-risk investment options include peer-to-peer lending, mortgage real estate investment trusts, and closed-end funds.

Developing Skills and Healthy Financial Habits

Persons who make sound investment decisions also have good money skills and financial literacy.It is important to develop healthy financial habits to stay away from debt and increase your net worth. Essential skills to focus on and master include tax, debt and credit, spending, and saving skills. Analytical skills also help with problem solving, prioritizing, planning, financial planning, and decision making. People with strong analytical skills are also good at risk management and risk analysis, troubleshooting, and data interpretation. Having good financial literacy is also the key to making sound decisions and achieving short- and long-term financial goals. People with good financial literacy have understanding of basic concepts such as interest rates, repayment terms, inflation, bear and bull market, and liquidity.

Diversifying Your Income

Relying on a single source of income can be risky because you are dependent on it, whether it is your regular job or rental income. The main types of income to look into are capital gains, royalty, rental, dividend, interest, profit, and earned income. Profit income refers to profits made by selling goods or offering services. Interest income is money that you get by investing in different interest-bearing products which basically means that you are lending money to an individual or institution.

Dividend income is an example of a passive source of income that you get by investing in company shares. Common types of dividends include liquidating, scrip, property, stock, and cash dividends. Building a balanced portfolio involves investing in a mixture of instruments for optimal returns. A conservative portfolio includes up to 75 percent of fixed-income securities, between 5 and 15 percent of cash and cash equivalents, and 15 to 20 percent of equity investments. A moderate-risk portfolio, on the other hand, includes up to 40 percent of fixed-income instruments, between 5 and 10 percent of cash and cash equivalents, and up to 55 percent of equities. After deciding on the right mix of assets, the next step is to choose from different sub classes of assets such as corporate and government debt or foreign and domestic stocks. The last step is to choose from different investment instruments such as exchange-traded funds, mutual funds, bonds, and stocks.

There are simple things to do to achieve financial security and freedom, including budgeting to find out whether any money is left to try to increase your net worth. Assessing your present net worth, on the other hand, will help you to see how close you are to reaching your financial goals. Choosing the right investment instruments will also help you to build your net worth and mastering basic money skills will help to this end. Financially literate people know how to track their spending, manage debt, create and stick to a budget, and make sound decisions when it comes to choosing the right insurance product or investment tool. Financially literate people are also in a better position to avoid costly mistakes such as being defrauded or falling victim to predatory lenders. Mastering essential money skills is the key to achieving financial health and making money work for you in the long run.

Is Being Debt-Free Possible?

By Sam Leave a Comment

It is possible to live debt-free if you set a budget and realistic goals and stick to them, live within your means, avoid high interest rate loans, and pay off outstanding balances.

Set Budget and Goals

The first step to being debt-free is to set a monthly household budget and weigh your income and expenses. Make a list of essential expenses such as property taxes, rent or mortgage, gas, water, and electricity bills, and groceries. Think of other expenses such as coffee, restaurants, baby sitting or daycare, alimony, child support, credit card balances, etc. Make note of expenses that you can cut if the total amount exceeds your income. Then you should list all sources of income in your household. These can be salaried income, wages, real estate investments, unemployment compensation, or business net income. Other sources of income include high-yield savings, compensatory damages, cash rebates, and sick pay benefits. Add up your expenses and your income sources and see whether you will have any money left by the end of the month. If your expenses exceed your income, this is a red flag which- shows that you are financially vulnerable and should adjust your budget accordingly.

Live within Your Means

Whether you are in the low- or high-income bracket, living from paycheck to paycheck is simply making ends meet. But it can be worse. Many people make impulse purchases that they later regret or buy things that they rarely or never use. Some people tend to stock up on food and products that are on sale and spend a lot of money. Instead of buying items on their shopping list, they end up purchasing 10 cans of kidney beans and 50 whole-grain cereal bars. Buying complementary items is also a mistake when you try to stick to a budget.

Do Not Use Payday Loans

Many payday lenders in Canada offer short-term loans with unfavorable terms and extremely high interest rates. This is a last resort for people who face unexpected expenses and emergencies and cannot access better solutions such as low interest rate cards and lines of credit. The problem with payday loans is that charges can be as high as 30 percent of the total amount borrowed. The interest rate is much higher than that of standard solutions such as personal loans and lines of credit. The focus should be on building savings for rough times and unexpected expenses. People who often resort to payday loans are usually advised to try to build a healthy score so that they have access to different borrowing solutions.

Pay off Your Credit Card Debt and Use Only Cash or Interac

If you have multiple cards and excessive debt like many Canadians do, it is high time to start paying off your outstanding balances. One way to go about this is to focus on one card at a time. Compare interest rates and start with the card that goes with the highest rate. Another option is to pay the smallest balance first and then focus on the next smallest balance. If you carry large balances, you should always try to pay more than the minimum. This is also a good way to save on interest charges, especially if you have high interest credit cards. Once you have paid your card balances, you should try to use cash or Interac only to avoid accumulating debt. People usually spend less because they physically hand over their hard-earned money. Using cash also makes it easier to budget by allocating money to different spending categories. With credit cards, it is much easier to lose track of spending and overspend. Of course, whether you use cash or credit depends on the particular situation and your finances. If you only make small, occasional purchases, then you can use your credit card. If you are not organized and are usually late on bill and credit card payments, then you may want to use debit or cash. And if you have excessive debt, it is best to use cash only.

Another option is to use Interac to pay for products and services. Your card will be linked to your savings or checking account to make payments. This allows you to keep track of your purchases and spending. One of the major benefits is that you use your own cash instead of credit. Another benefit is that you can use your card to make purchases online and from different retailers. An added benefit is the fact that many financial institutions in Canada feature Interac Debit, among which CIBC, ATB Financial, West Credit Union, Unity Credit Union.

Never Get a Cash Advance

It is best to avoid cash advances to stay away from financial trouble. The problem here is that this is a type of loan that adds to your card debt. If the fee is 5 percent or $5, whichever is greater, you will pay $15 on a $300 advance. Another problem is that the interest rate is typically higher than the balance transfer and purchase rates, and borrowers also pay ATM fees. An added problem is the fact that there is no interest-free or grace period meaning that charges begin to accrue at the date of the transaction. So, instead of getting a cash advance, it is better to look into alternatives such as a peer to peer or personal loan, salary advance from your company, or loan from family members or friends.

Use Debt Consolidation to Get Your Finances in Order

Using consolidation is one way to get control of your finances if you have multiple debts. In this case, you take out a single loan and combine multiple payments. Many banks in Canada offer this financial solution, including RBC, CIBC, TD Bank. Banks allow customers to combine different types of debt such as personal loans, lines of credit, and card balances. There are multiple benefits for borrowers, and one is that they save a lot on interest charges. If you have two or more credit cards with high interest rates, for example, debt consolidation is definitely an option to explore. The fact that you have a single payment to make, instead of multiple payments, makes it easier to avoid being late. Obviously, you will also feel relief knowing that your accounts will not be turned over to a collection agency. There are downsides as well, one being that financial institutions usually require good credit. If your score is less-than-perfect, you may not qualify. Another downside is that consolidation loans usually go with higher monthly payments because the terms are shorter than standard loans.

Whether consolidation is the best solution depends on different factors such as amounts due, types of debt, income and assets, etc. There are alternatives to consider, including credit counseling, personal bankruptcy, debt settlement, cash-out refinance, HELOCs, and home equity loans. All solutions have pros and cons. Debt settlement, for example, allows borrowers to get lower interest rates but they cannot access credit when they are in the program.

Should You Go on Vacation if You’re in Debt?

By Sam Leave a Comment

Summer is already here, and you probably wonder if it is a good idea to go on vacation if you are in debt. Well, this depends on how much you owe, your monthly payment amounts, and whether you plan a short trip to the countryside or a long summer vacation overseas. This also depends on your income and expenses, the number of family members, and other factors.

When Vacation Is Not an Option

In some cases, vacation is not an option, and you may want to think of other ways to have a good time. This is the case when you have:

High-interest debts
Multiple debts with large outstanding balances
Seasonal or part-time job
Unstable income

If you have to add more debt to go on vacation, then it may be better to change your summer plans and put off your trip. If you have paid vacation days, on the other hand, this is definitely a plus. In any case, if going on vacation is a source of stress and you are in a precarious financial situation, it may be better to put off your trip. There are other questions to ask yourself before you make a decision, and one is how quickly you want to get rid of your debts. If you want to repay your debts within a short period, then going on a short vacation or putting off your trip makes more sense. If you have a 25-year mortgage with affordable payments, you don’t have to wait for 25 years to go on vacation. If, on the other hand, you have a payday loan with a short term of 1 – 2 months and a very high interest rate, then it is best to pay it off first. If money is in short supply and you go on vacation, you may incur an extremely high interest rate. This will only make things worse.

Obviously, to go on vacation, you should save enough money for plane tickets, accommodation, travel, leisure activities, dining, car rentals, and anything else. By charging purchases on your card you will spend a lot on interest charges. Interest charges add up if you only pay the minimum and you will end up paying dearly. This is especially true if you hold a high-interest credit card, whether a specialty or standard card. At the same time, if you have a travel credit card, you may want to redeem your points for airfare and accommodation to save money. Many travel credit cards feature complimentary welcome bonuses, rewards points to redeem for travel expenses, affordable travel packages, discounts, room upgrades, and a lot more.

Budget Travel

Hostels

If your monthly payments are reasonable, travelling on a budget is one option to consider. If you don’t mind staying in hostels, this will save you a lot of money. Hostels are inexpensive compared to other accommodation options such as cottages, rental homes, resorts, family hotels, etc. What is more, you can choose from different types of hostels such as boutique or luxury hostels, eco and design hostels, party and surf hostels, and others. It all depends on your budget, preferences, and destination. Some hostels even offer free food such as BBQ, baked goods, instant coffee, milk, a choice of cereals, and a lot more. If you choose a hostel that offers free breakfast, you will save more. If breakfast is not offered, then you can have a big meal at lunch. Many budget restaurants offer lunch specials for cheap. Another idea is to shop at food courts, stores, and markets near closing time which is when you will find deeply discounted food items.

Check short-term rental homes as well. Some rental homes are quite affordable, especially those that are away from busy locations. Many short-term vacation homes have a fully equipped kitchen as well. Plus if you travel with a friend or companion, you can split the costs.

Camping

If you have camping gear or you can borrow from a friend or relative, this is also an option to consider. You may also buy used camping gear and equipment. You will need camping equipment and essentials such as:

Pillows
Sheets
Sleeping bags
Tent
Thrash bags
Aluminum foil
Campfire grill
Dish pan
Cutting board
Can opener
Folding table
Folding chairs

Don’t forget to bring your first aid kit with you. Pack things such as your sunscreen, bug repellant, bee sting kit, cotton swabs, roll bandages, splinting materials, antiseptic wipes, personal medications, and anything else you can think of.

Book in Advance to Save Money

Book air travel, bus travel, hostel or hotel accommodation, and train journeys well in advance. This will save you a lot of money. It is best to book at least 1 month in advance because prices tend to go up. Usually prices go up the closer you get to your departure date or trip. To save even more, you may want to consider going on vacation during low season and off-peak season when hotels and flights are cheaper compared to peak season.

Choose a Budget Destination

If you have outstanding balances, it is best to choose a budget destination such as India, Vietnam, Cambodia, Sri Lanka, or Honduras. Check low-cost airlines which serve major hubs and airports. The main benefit is obviously the low price of tickets. On the downside, low-cost carriers offer fewer amenities compared to standard airlines. Budget destinations such as Sri Lanka, Cambodia, and others have plenty to offer – affordable accommodation and food, breathtaking nature, beaches and palm trees, tea and coffee plantations, waterfalls, lakes, mountains, temples, and more. An air-conditioned room equipped with amenities, Wi-Fi, dining facilities, spa and a swimming pool can cost you as little as $50 – $60. In fact, some hotels feature rooms with a view of the garden or beach and a private hot tub and sauna for as little as $50, with superb breakfast included in the price. Other budget destinations include the Dominican Republic, Argentina, Greece, Bulgaria, and Hungary.

Opt for a Cruise Vacation

One alternative is to choose an inexpensive cruise. The price of a cruise usually includes different dining options for snacks, dinner, lunch, brunch, and breakfast, your stateroom, amenities, waterslides, pools, and evening shows. The price also includes room service, youth and kids’ programs, a fitness center, lounges, entertainment and live music. Non-alcoholic and alcoholic beverages are usually not included in the price and so are specialty restaurants, photos, shore excursions, and video games. The same goes for tips and service gratuities, laundry services, beauty salon services, and spa treatments. If you have children, check whether kids under the age of 18 sail free.

Saving Money While on Vacation

There are other ways to save money while on vacation to avoid overextending yourself and adding more debt. If you plan a vacation at home, you may want to shorten it. Why not pick a desired location to spend a few days with family, friends, and loved ones? Just choose an affordable location and make it a weekend-long trip to visit places of interest, attractions, and nature wonders. Choose a location nearby or within a 3 – 4-hour drive to save on gas. This way, you will also have more time for leisure and fun activities. Instead of doing local trips, you can visit friends or family to spend time with them. If they are willing to host you, you will save on accommodation as well.

5 Steps to Reduce your Credit Card Debt by Christmas

By Sam 2 Comments

There are many ways to go about and deal away with credit card debt by Christmas. From debt consolidation and balance transfers to cutting non-essential spending, it is possible to reduce debt and eliminate sky-high balances.

Step 1 – Add up All Debts

The first step to reduce your credit card debt is to find out how much you owe. What you can do is add up all your debts, including card balances, mortgages, vacation loans, vehicle, home equity, and personal loans, lines of credit, and so on. Add up all balances to find out the total debt amount. Then make a list of your sources of income, including wages, salary, child support, alimony, real estate investments, and others. This is a good way to figure out how much you make and how much you owe. If you make less than you owe, you are in serious trouble and it’s time to rethink your finances now that the Christmas season is behind the corner.

Step 2 – Balance Transfers: Get a Zero Interest Credit Card

Transferring balances is a good option for high interest cards and allows borrowers to take advantage of a zero or very low rate over a promo period of 6 – 12 months. In this way, you will be paying more toward the outstanding balance and less toward interest charges. An additional benefit is that borrowers are free to choose from different cards with attractive terms and add-ons. Examples include events and concert tickets, deals and discounts, complimentary bonuses, points, and more. On the downside, there is always a risk to end up paying a higher interest rate if you don’t meet the eligibility criteria. It is also a good idea to inquire about the balance transfer fee because it can cost more than interest on your current account.
A balance transfer can be a good option to save on bank fees and interest rates, but make sure you check all details with your financial institution. There are plenty of credit cards with low interest rates of 10 – 12 percent and low or no annual fees. Ask about penalty charges, the grace period, cash advance fees, foreign transaction and balance transfer fees, late and over the limit fees, etc. Some cards also go with replacement, credit limit increase, and processing or application fees. These are less common but it is always good to be on the safe side. Some financial institutions also charge returned check fees, expedited payment fees, and monthly fees.

Step 3 – Consolidate Your Debt

Debt consolidation is a good choice for people who pay multiple card balances. If you have two or more cards with high interest rates, then consolidation is a solution to look into. Apart from balance transfers, there are other options to consolidate your debt, including a line of credit, home equity loan, and unsecured personal loan. The choice of financial solution depends on factors such as available cash, credit rating, types of debt, total debt amount, and others.

Step 4 – Join a Credit Union

Try to join a credit union if you are not a member already. Credit unions usually offer cards and loans with lower rates and competitive terms. Unions are non-for-profit entities that cater to their members and pass through profits in the form of benefits such as low interest rates, low annual rates, etc. Many unions offer credit cards with interest rates that can be as low as 6 percent. What you can do is try to pay the balance in full and keep your current card. Then you can apply with your local credit union to benefit from the rate they offer. Alternatively, you can transfer the existing balance the same way you would do at a traditional bank.

Step 5 – Cut Unnecessary Spending

Splurging and non-essential spending are the main culprits for piling debt, and this is especially true for low-income persons and households. If you tend to splurge and overspend, it is time to have a good look at your expenses. There are basic necessities to cover, including food, electricity, gas, water, etc. Routine expenses also count toward essential expenses. Examples include appliance replacement and repair, deductibles, medical costs and medications, car repairs, emergencies, and so on. Discretionary spending, on the other hand, includes things like parties, baby showers, birthdays, anniversaries, and holidays. If you have a piling credit card debt, then you may want to look at your budget and identify the things you can go without. They are destroying your budget. Non-essential expenses include vacations, luxury clothing, dry cleaning, going to the gym, going on outings or to the pub, and others. If you have a huge debt load to pay off and are living paycheck to paycheck, it is important to cut unnecessary spending. Then if you have a seasonal or part-time job and your income is very low, you may want to cut utility expenses as well (like opt for a basic internet plan).

There are other ways to reduce your credit card debt by Christmas, and one is to ask your financial institution for a lower interest rate. If you are a regular customer, your bank may be willing to slash the rate. If you have a very good or spotless credit score, you are likely to get a lower interest rate. If you use multiple cards, one way to reduce your debt is to pay off one card at a time. It is easier to start with the lowest balance first. If your goal is to improve your credit rating, however, you may want to start with the card that has the highest utilization rate. A third option is to apply for a loan through a peer to peer network to pay off existing credit card balances. Peer to peer lenders offer affordable loans with rates that are significantly lower compared to standard cards. A spotless or very good credit score and a steady job is all you need to qualify.