Would You Credit It?

It will soon be time to start planning summer holidays and all of the available research suggests that this year tens of thousands of us are going to be loading even more debt on to already straining credit cards.

If you are one of them then now might be a good time to have a look at your credit card balances and make sure that you are doing all that you can to repay the debt as quickly as possible. It’s all too easy to get into the habit of making minimum payments to credit cards every month, budgeting for that payment rather than actually working out how you are going to repay the whole balance over a manageable period of time.

Over the last few years some credit card companies have actually reduced the minimum payment that people need to make evert month and this is just making things even worse since all it means is that it will take you longer to clear the balance and cost you more, often thousands of pounds more, in interest charges.

You should make sure that the card you are using charges a competitive rate of interest, and if you are paying too much then you should consider transferring your balance to a card with a lower rate of interest. It might be possible to move to a card with zero percent interest for the first year or two, but look out for any upfront costs, which are usually a percentage of the balance you transfer. It is possible to wipe out any benefit of no interest charges with a large up-front fee.

Once you have transferred then you need to change your habits. Don’t settle back into a minimum payment routine. Look at your budget and decide how much you can afford to pay every month and how long it will then take you to clear your balance. And stick to it!

And if you find that you are struggling to make payments regularly then take advice early. And make sure that you take it from someone who won’t charge for their time.

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