Despite financial institutions realising that people are struggling during the credit crunch, they have continued to treat credit card debt as a cash cow and have milked it for all it's worth. Interest rates have been cut, yet rates of APR customers are charged continues to rise.
Making the Minimum Payment Each Month Does Not Clear Credit Card Debt
Simply making the minimum 2% payment each month has a minimal effect on credit card debt. It is shocking to know that it can take approximately 40 years to clear the balance if only the minimum payment is made. Paying in excess of the minimum amount each month will assist in clearing debt in a fraction of the time.
Reduce Credit Card Debt with Savings
If one is fortunate enough to have savings use these to clear credit card debts now. Whilst savings may accrue 4% interest, a credit card APR is usually 18% or greater. It simply isn't sound economics to leave money in a savings account when debts exist.
Debt Management Plan
Start a Debt Management Plan and it is possible to freeze interest and stop creditor harassment. Provided there is a minimum of 3 creditors and the debtor can afford to pay a minimum of £100 per month towards the arrangement a Debt Management Plan could be like a breath of fresh air.
Reduce the Cost of Debt by Getting a 0% Introductory Credit Card Deal
There are numerous 0% APR credit cards on the market as financial institutions are fighting each other for new business. Take advantage of these offers and transfer credit card balances across to take advantage of 0% introductory rates.
Pay Off Credit Card Debt with a Debt Consolidation Loan
A consolidation loan could help set a clear target for paying off credit card debt. It also allows a debtor to get a more favourable rate of APR as credit cards are one of the most expensive forms of borrowing. A disclaimer is that one shouldn't pay off credit card debt and then run up further debts on the same cards. Either reduce the credit limit or close down all but one of the accounts.
Unlawful Credit Card Agreements Could Result in Debt Written off
If a credit card or loan agreement was taken out before April 2007 there is a strong possibility that it isn't lawful - a 60% chance, in fact. Ask a solicitor to check to see if the credit agreement is unlawful and complies with the Consumer Credit act 1974. An example of a non-compliant agreement is if the credit limit was increased without the borrower requesting this.
Credit card debt can be really stressful, but don't give up hope as there are a number of solutions available. It is important to act now rather than later as the rate of APR charged is high and will exacerbate financial problems.
 |
