Tackle credit card debt ‘as quickly as possible’
In taking steps to clear off money owed on credit cards as soon as possible, people should find they have more cash to spend on purchasing items, it has been reported.
Claiming money owed on credit cards is “the devil’s debt”, Neil Faulkner writes in a lovemoney.com article that the less interest consumers have to pay on debt will free up disposable income.
One means of getting to grips with how much is owed, he states, is to seek out a 0% balance transfer credit card. By doing this, Mr Faulkner reveals borrowers will not have to pay any interest on the total amount they have transferred across for a set period of time, allowing debts to be repaid “much faster”.
The lovemoney.com writer also claims creating a budget to ensure more than the minimal repayments are made can be helpful, with setting up a direct debit to take money out of an online bank account an effective way of doing this.
As an example of the difficulties just making the minimal monthly repayments on a card can cause, a debt of £5,000 where only the bare minimum is paid back will take more than 30 years to clear off and incur more than £5,000 in interest charges. However, paying back £200 every month will see such debt take three years to clear off.
In doing so, he asserts consumers should be able to avoid the problems that can be caused in missing a demand for payment. Indeed, should one repayment be missed he points out competitive introductory rates could be lost and borrowers will be charged interest and fined.
Furthermore, a negative mark will be placed on a credit report, which could mean access to credit in the future could be a more difficult and expensive process.
Such claims come as Neil Munroe, external affairs director at Equifax, claimed that in the current financial climate people need to be as informed as possible when making an application for credit. Research by the firm showed requests for credit reports during the first quarter were up 9.6 per cent compared to the same period last year.
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