Credit Card Advice

Credit card advice is simple, if you use them and pay them off the same month, they are a useful tool and wont cause you any problems. If, however, like the many people out there, you are using your credit card to get the weekly shopping and struggling to clear it each month, you may be at the start of a spiral that could lead to problems down the line.

Useful Credit Card Advice

You do need to clear your credit card as soon as possible, whilst it is unrealistic for most of us to pay them off each month, paying only the minimum payment is going to cause problems down the line. Paying the minimum payment can mean that the debt will last 15 years or more and you will pay back more than you borrowed in interest. In some cases, credit card payments are 50 – 60% interest, meaning that if you pay £25 off a card, only £10 of debt is cleared. To avoid this situation follow these three pieces of advice.

1. Do not spend on the credit card – for any reason
   1. The debt will not increase and neither will interest accruing on the account
   2. You may be strapped for cash in the short term, but in the long term, you will be better off
2. Pay at least double the minimum amount on your current bill and maintain that level until it is cleared
   1. If you do this, you will clear much more debt. In the above example if you paid £50 instead of £25 then £35 of debt would be cleared. See the example below.
   2. If you do this and maintain the payment level, the amount you owe will reduce much faster and the interest will gradually reduce. this means that more of the money you pay each month will clear debt not interest.
3. Speak with your credit card company, if you are struggling, they may be able to stop interest or charges.
   1. This would speed up the rate at which you are clearing the debt,
   2. However, there is no guarantee that they will be able to help. If you believe that this is an option, please speak to us first for some more specific credit card advice.

Example using £2000 credit card debt at an average rate 0f 18%

	Minimum Payment	Double Minimum Payment
Amount Owed	£2000	£2000
Interest Rate	18%	18%
Minimum Payment	£40	£40
Actual Payment	£40	£80
Interest Amount	£30	£30
Debt Cleared Amount	£10	£50
Term Paid Over	7.8 years	2.6 years
Amount Paid over Term	£3724	£2526

Important Information About Our Service & Fees

Whilst we strive in all cases to negotiate the best deal with your creditors, we cannot guarantee a reduction in interest or charges. Also as one of the largest providers of debt management solutions in the UK, we are able to provide initial advice over the phone without charge, however, if a debt solution is taken out, please be aware that fees will be charged. We aim to keep these fees as low as possible and believe that we are very competitively priced. View more detailed information on our fees including examples for each product here.

Further Additional Information

• What if I decide that I don't want to go ahead?
• Will my credit rating be affected?

The insolvency service has produced a guide for people who are struggling with debt, which outlines each of the available solutions.

If an IVA is not maintained it could lead to bankruptcy.