contact information · credit card debt? Has your accumulated balance spiraled out of control that...
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Financial Consumer Protection Department Financial Supervision Research and Consumer Protection Sub-sector Supervision and Examination Sector Bangko Sentral ng Pilipinas 5th Floor Multi-storey Building BSP Complex, A. Mabini St., Malate 1004 Manila Contact Details: Direct Line: (02) 708-7087 Email Address: [email protected] Financial Education: Building Block for a Stronger Economy Developed by the Financial Literacy and Advocacy Division Financial Consumer Protection Department contact information Do you feel overwhelmed with your outstanding credit card debt? Has your accumulated balance spiraled out of control that you are now having difficulty paying it off? Below are 5 ps to help you manage your credit card debt level and regain control of your finances. 1. Set a Goal Establish realisc goals for paying off your accumulated balance to a manageable level. Monitor your progress (in person, through phone or online) regularly to keep you on track. 2. Create a Spending Plan Create a spending plan (weekly or monthly) for your income. This will help you live within your means and will give you a meline on when you can reduce your outstanding balance. 3. Trim your Expenses to Free Up Some Cash Keep a record of and categorize your spending to know where your money is going. Review your record and look for opportunies to cut your expenses (i.e., dining out, watching movies, etc.). This will free up some cash that you can use to pay off your outstanding balance. 4. Pay Off First the Card with the Highest Interest Rate If you have outstanding balances with mulple credit cards, maximize payments on the credit card with the highest interest rate. Once fully paid, pay off the card with the next highest interest rate. This will save you on interest payments and help you sele your debts faster. III. 5 Tips for Paying Off Accumulated Credit Card Debt 5. Stop Using the Card Keep the card out of your wallet so you are not tempted to use it. Paying cash for purchases helps in making you conscious about your spending. If the problem is severe and if you are falling behind your bills, you may negoate with your bank or creditor to be able to sele your obligaon.
Transcript of contact information · credit card debt? Has your accumulated balance spiraled out of control that...
Financial Consumer Protection DepartmentFinancial Supervision Research and Consumer Protection Sub-sector Supervision and Examination SectorBangko Sentral ng Pilipinas5th Floor Multi-storey BuildingBSP Complex, A. Mabini St., Malate1004 Manila
Contact Details:Direct Line: (02) 708-7087Email Address: [email protected]
Financial Education: Building Block for a Stronger Economy
Developed by the Financial Literacy and Advocacy DivisionFinancial Consumer Protection Department
contact information
Do you feel overwhelmed with your outstanding credit card debt? Has your accumulated balance spiraled out of control that you are now having difficulty paying it off? Below are 5 tips to help you manage your credit card debt level and regain control of your finances.
1. Set a Goal
Establish realistic goals for paying off your accumulated balance to a manageable level. Monitor your progress (in person, through phone or online) regularly to keep you on track.
2. Create a Spending Plan
Create a spending plan (weekly or monthly) for your income. This will help you live within your means and will give you a timeline on when you can reduce your outstanding balance.
3. Trim your Expenses to Free Up Some Cash
Keep a record of and categorize your spending to know where your money is going. Review your record and look for opportunities to cut your expenses (i.e., dining out, watching movies, etc.). This will free up some cash that you can use to pay off your outstanding balance.
4. Pay Off First the Card with the Highest Interest Rate
If you have outstanding balances with multiple credit cards, maximize payments on the credit card with the highest interest rate. Once fully paid, pay off the card with the next highest interest rate. This will save you on interest payments and help you settle your debts faster.
III. 5 Tips for Paying Off Accumulated Credit Card Debt
5. Stop Using the Card
Keep the card out of your wallet so you are not tempted to use it. Paying cash for purchases helps in making you conscious about your spending.
If the problem is severe and if you are falling behind your bills, you may negotiate with your bank or creditor to be able to settle your obligation.
I. Paying the Minimum Means Paying Interest to the Maximum
Paying only the minimum amount due on your credit card bills look so easy on your budget, since you only have to pay a seemingly small amount. However, if you take into consideration the interest due, the amount you are actually paying may not be so insignificant at all.
Below are different payment scenarios showing how much it will cost if you pay only the minimum due every month and how paying a little more than the minimum amount due can impact both the interest due and the payoff period.
II. Different Payment Scenarios
Scenario 1: Maria pays only the minimum amount due every month.
Total Outstanding Balance = ₱5,000
Monthly Interest Rate = 3.5%
Monthly Payment = ₱500+₱1500
No. of months to pay off debt = 3 months
Total Interest Paid = ₱331.14
JUAN
Total Outstanding Balance = ₱5,000
Monthly Interest Rate = 3.5%
Monthly Payment = ₱500+₱200
No. of months to pay off debt = 9 months
Total Interest Paid = ₱856.54
JULIA Total Outstanding Balance = ₱5,000
Monthly Interest Rate = 3.5%
Monthly Payment = ₱500+₱500
No. of months to pay off debt = 6 months
Total Interest Paid = ₱596.12
PEDRO
MARIA Total Outstanding Balance = ₱5,000
Monthly Interest Rate = 3.5%
Monthly Payment = ₱500
No. of months to pay off debt = 13 months
Total Interest Paid = ₱1,263.27
Total Outstanding Balance (Principal)
Interest Rate
Minimum Amount Due
Scenario 2: Pedro pays the minimum amount due plus ₱200 every month.
Scenario 3: Julia pays the minimum amount due plus ₱500 every month.
Scenario 4: Juan pays the required minimum amount due plus ₱1,500 every month.
Interest
Payoff Period
Foregoing illustration shows that paying only the
minimum amount due would result in paying a
significant amount of interests over time. Hence,
doubling, or even tripling the costs you paid for the
things you bought using your credit card. However,
additional payments of at least ₱100 can significantly
reduce the total interest to be paid, as well as the
period of repayment.
= ₱5,000
= 3.5% / month or
42% / annum
= ₱500
ASSUMPTIONS
(in ₱)
