Credit Card Debt

9 July 2014

British people owe £55.6 billion on credit cards, triple the amount of personal credit card debt in 1993. It's only too easy to run up large debts on your cards, particularly if you use plastic to tide yourself through tight financial times or simply don't keep a check on what you're spending.

Although it can seem overwhelming, there are steps you can take to help with your credit card debt.

Types of credit card

Make sure that you know what type of credit card you have and how you are using it, as this can make a big difference to how much you get charged in interest and fees.

  • Standard credit cards: A standard credit card will let you make purchases on credit up to a pre-arranged limit. Your limit is dependent on your credit score. Normally there will be an interest-free period for the first 30 days on purchases, which means that if you pay your balance in full every month you can avoid paying interest. If you don't do this, you will pay interest on any outstanding balance.
  • Credit card cash advances: Many credit cards let you take out cash at ATMs, usually at a much higher interest rate than standard purchases or loans.
  • Credit card cheques: You can request credit card cheques from your provider, which let you write a cheque to clear bills or make payments. However these tend to charge a transaction fee and have higher interest rates than purchases.
  • Store cards: These are issued to use in a single store and often have introductory offers like 10% of purchases. Generally these come with higher interest rates than standard credit cards.
  • Platinum or premium cards: Sometimes known as status cards, some of these cards charge a fee in addition to interest and come with user benefits like insurance or cashback.

Rules introduced in 2011 mean that now your credit card provider must put your monthly payments towards your most expensive debts, those with the highest interest rates.

Signs of problem credit card debt

Experiencing one or more of these is a sign that you have a problem with your credit card debt:

  • Using more than 90% of your card's capacity
  • Anxiety about making repayments
  • Constantly thinking about your debt
  • Paying off balances using other debt
  • Missing monthly payments

Tips to reduce credit card spending

If you need to reduce your spending on credit cards, follow these tips:

  • Refuse raises to your credit limit
  • Leave your card at home when shopping
  • Use a monthly budget to avoid running out of money
  • Avoid using your card for cash withdrawals or cheques

Zero or low interest for life balance transfers can make it balances cheaper to pay off but you need a good credit score to get these deals.

Credit card debt help

If you're struggling with credit card debt there are steps you can take to get it under control.

Call us to get advice about which solution is best for you, from one of our experienced debt counsellors.

Depending on your situation this could be a debt consolidation loan, a debt management plan, an IVA or even bankruptcy as a last resort.

Complete this form and we'll find the right option for you

Call us on our freephone number 0808 163 9579

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