Warning: Late repayments can cause you serious money problems. For help, go to moneyhelper.org.uk. We are a broker not a lender.
Warning: Late repayments can cause you serious money problems. For help, go to moneyhelper.org.uk. We are a broker not a lender.
Nov 6, 2019
Credit can be a useful and powerful tool if handled with care. It can also be an oppressive master if your debt gets out of control. The best way to manage your debt is to be careful in your use of credit.
As shown by the latest UK money statistics, the average UK household will have a total debt of £59,166. Of that total, £2,625 was the average credit card debt. Assuming the minimum monthly payment, it would take slightly less than 27 years to pay off this credit card debt.
The best debt advice to keep your debt under control is to establish a realistic budget. This critical element of your finances is often neglected, but it is your best guard against overwhelming debt.
We have assembled a few tips on what you might do should you find yourself overtaken by debt.
The first thing you want to do is determine exactly how much debt you have. Gather all your statements for credit cards, store cards, banking, and all loans. Determine the total amount you owe as well as the total of monthly payments. Then, compute the sum of the interest you are paying both monthly and annually. The interest is what your credit costs.
Focus on the bills with the highest interest rate and pay them off first. If possible, pay extra on the one with the lowest balance and the highest interest. You can retire it more quickly and shift all of that payment to the next card. When you pay off one bill add that money to the amount you pay on the next bill.
This is the fastest way to cut your debt expenses and eliminate it.
Always strive to pay more than the minimum on every credit bill that you incur. As noted above, making minimum payments is quite a lengthy and costly endeavor.
If your credit is in good standing, you may be able to take advantage of a 0% balance transfer offer. You will still owe the debt, but you can eliminate the interest with this new card; which brings us to the next bit of debt advice.
Do not incur any additional debt. You are trying to eliminate debt, and using credit at this time is counterproductive. Purchasing items beyond your means is likely how you came to this situation.
Leave the credit cards at home. You will not be so easily tempted if the card is not on your person. If nothing else, it will curb any impulse buying.
If you have any store cards, it is best to eliminate them entirely Store cards tend to have the highest rates, many of them at or near 30%. That can be almost double the typical credit card rate.
There are resources for debt advice online, which could offer advice and counseling along with tools and assistance. They are in place to help with such issues, and you should take full advantage of them.
And don’t forget your budget. Stick with it. Your budget will help you get out of debt and stay out of debt.