The escalating cost of living, combined with rising aspirations, is causing major problems for families. Credit card debt continues to rise because consumers have become increasingly reliant on their cards for survival. The problem has been exacerbated by borrowers paying only the minimum monthly payment on high APR personal debt with no defined term.
Recent research by the CCCS, a debt counselling charity, found that, "The average UK adult has credit card debt 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 related debts every month, 3.5 times more than three years ago."
Why is Credit Card Debt Increasing?
Whilst many consumers have created credit card debt by paying for essential goods and services, many more could reduce spending substantially. Personal borrowing is increasing because we live in a quick-fix society and have unlimited wants. People aren't prepared to save to buy things when credit is so readily available.
This problem is further exacerbated by the high rate of APR and the fact that so many people only make the minimum monthly payment on credit card debt. Making just the minimum monthly payment only serves to benefit credit card companies as only a small amount of the capital is actually paid off. This can prolong the burden of credit card debt for upwards of 40 years.
Can Credit Card Debt be Eliminated by Paying More than the Minimum Monthly Payment?
Paying more than the minimum monthly payment can reduce credit card debt by several decades. The best way to reduce personal debt is by making the payment and then requesting that the credit limit is lowered. Failing to reduce the credit limit will only lead to the credit being used time and again. Unlike a personal loan, there is no defined term on credit card debt.
Ways to Reduce Credit Card Debt
If family finances are rather tight, it is sensible to work overtime or find an evening job. Some people choose to sell unwanted items on eBay or at a car boot sale. Others choose to consolidate debt with an unsecured loan or a secured loan if bad credit is a problem. The key is to either pay it off as quickly as possible or switch to a cheaper source of borrowing.
Using a Debt Solution to Eliminate Credit Card Debt
When high levels of personal borrowing become an issue, a debt solution is a welcome escape from creditor harassment. Serious debts of over £15,000 can be addressed with an Individual Voluntary Arrangement. Others choose to deal with more modest financial difficulties with a Debt Management Plan.
Credit card debt is a growing problem for numerous families. If unable to make more than the minimum monthly payment and credit is already impaired, it is important to deal with the problem via a debt solution. Managing the debt effectively is a lot better than creditor harassment and it can even mean that further interest and charges are frozen.
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