Is Credit Card Debt a Necessary Evil?
High APR Personal Debt, Living Costs & Debt Solutions
Feb 10, 2009
As families struggle to keep pace with rising household bills and the cost of living, increasing numbers are building credit card debt. High APR personal debt is having a serious effect on disposable income and millions of families are struggling to even make the minimum monthly payment.
The problem is that economic growth is built upon personal debt, such as credit card debt. Sadly, for those struggling to make the minimum monthly payments, credit card debt is becoming harder to clear. The credit crunch and restrictions on late payments charges have created an excuse for financial institutions to increase the rate of APR on credit card debt.
Rising Levels of Credit Card Debt
According to research by the Consumer Credit Counselling service (CCCS) in Q3 2008 , "The average UK adult has debts on credit cards approaching £2,300. Clients of CCCS owe on average over £14,000 on credit cards. CCCS counsellors are now dealing with almost 50,000 credit card debts every month, 3.5 times more than three years ago."
Minimum Monthly Payments on Credit Card Debt
A study carried out by the University of Warwick found that the presence of minimum monthly payment on credit card debt has caused many people to reduce the amount they choose to repay each month. It warned that the impact of these minimum monthly payment figures could double the amount of interest consumers paid during the lifetime of their credit card debt.
Credit Card Refunds
A customer is entitled to a credit card refund on a purchase of between £100 and £30,000 under S75 Consumer Protection Act 1974 when a problem arises. The objective is to stop a consumer creating debt on a purchase that was never received or not as it should have been. Payments don't have to be full, they can be partial payments.
Credit Card Debt and Debt Solutions
There are debt solutions available to assist those struggling with credit card debt. A Debt Management Plan is the right debt solution available for those struggling with more modest levels of credit card debt. It enables debtors to put all unsecured debts, such as credit card debt, under one roof and make a single payment to an intermediary.
Those facing more serious levels of credit card debt, as well as other unsecured debts, may wish to consider an Individual Voluntary Arrangement. This is a legally binding arrangement that can result in up to 75% of credit card debt being written-off. A debtor will need to make repayments for up to 60 months. It represents the main alternative to personal bankruptcy.
Credit card debt affects a number of families. Whilst it is advisable to try to clear more than the minimum monthly payment, a number of families would struggle to pay household bills and keep pace with the rising cost of living without their credit cards. As an unsecured debt, those in an impossible position can turn to a debt solution in order to eliminate personal debts.
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