Looking for help with your credit card bills?
Credit cards are a popular way of borrowing money and as a result they fall under the most common debt types in the world. Statistics show that UK has the largest card payment market in the whole European Union and the trend is continuing grow. According to BBA, leading trade association for the UK banking sector, only 42% of all credit card balances incur no interest. Research undertaken by the StepChange charity demonstrates that '43% of clients have had their credit card limit increased without asking for it'.
It is vital to be careful and analyse credit card charges on the amounts overdue. A lot of people tend to fall into the credit card debt trap when their monthly payments start to stack up and they don’t have the money to cover the loan. The most recent study undertaken by the Financial Conduct Authority (FCA) revealed that 3.3 million people in the UK tend to spend their money on repaying their credit card interest while their total debt is hardly ever lowered. Persistent credit card debt can be very expensive costing around £2.50 for every £1 repaid.
Are you struggling to pay your credit card debt?
It’s very easy to lose track of your money when you are using intangible cash and it is easily accessible. You only need to miss a few payments and you start accumulating debt. So what are your options for paying off credit card debt? Well, the key, of ‘course, is to pay as much as you can as fast as you can. The greater the amount you owe the more interest will be added in the end of each month and you might even end up paying double on the good purchased in the first place.
If you don’t have much money try to pay at least the minimum amount required by your card provider. Ideally, however, you should try and pay more than just a minimum because your balance will not be reduced much after interest will be added and you will be stuck with the same loan for a long time.
It is also important to remember that if you miss any payments, your credit card provider will add extra charges to your already existing credit card debt.
If your circumstances change and you no longer can maintain your credit card payments you should stop using your credit card and contact your card provider immediately. You should let them know your situation and ask for a reduced payment plan. Not all credit card providers will agree to that but it is worth a try since some of them will.
How to reduce your credit card debt?
It is worth considering transferring your debt to another card with a lower or even 0% interest rate. The thing to bear in mind is that some of the credit card providers charge 2% to 3% on the amount you are transferring as a one off fee. Therefore, you have to calculate and analyse how much money would a balance transfer allow you to actually save. If you do decide to transfer your balance don’t forget to close the old account to avoid the temptation of getting a loan on both cards.
If you have more than one credit or store card it is important to pay off the most expensive ones first in order to stop accumulating more debt. All credit cards have different interest rates that sometimes can be higher than payday loans. Before opening a new credit or a store card it is advisable to compare the interest rates to avoid falling into a credit card debt trap.
If you have any savings you can use them to repay your expensive card debts. This is because your debt will cost you more than you will be able to save on current bank interest rates.
It is important to bear in mind that your priority debts should be dealt with first because they have more significant consequences and might lead you to losing your home.
What to do if you have high credit card debt?
If you need money or debt advice you can contact StepChange or Citizens Advice Bureau for a free debt help. If your credit card debts are overwhelming and you will not be able to pay them back over a realistic period of time contact our personal insolvency team for a free and confidential advice.