9 percent of Brits rely on credit cards to get by

Monday, January 23, 2012

Category: Personal Finance Tips

According to new research commissioned by Gocompare.com, 26 percent of Brits are expecting to owe money on their credit cards throughout the course of the year.  In fact, findings have shown that 9 percent are reliant upon their credit cards in order to ‘make ends meet’.

The price comparison site also found that the increasing cost of living is the greatest financial worry for 22 percent of respondents, whilst one in four respondents would like to reduce their outgoings in 2012.  A further 35 percent reportedly want to become debt-free or lower their loan and credit card costs.  Statistics from the British Bankers Association have uncovered that Brits owe a combined sum of £60 billion on credit cards.

Gocompare.com has offered the following tips to help you ‘ditch your debt’ this year:

1. Take control of your debt.  Don’t ignore your statement when it arrives or interest will be added to the outstanding balance and your debt will increase.
2. Do not just repay the minimum.  Interest is added to any outstanding balance so the longer you take to repay your debt, the greater it will be.  When more than one credit card is held, also be sure to pay off the most expensive one first.
3. Switch to a credit card with an extended interest free period on balance transfers.  A small balance transfer fee of approximately 3 percent is typically charged and will initially be added to the debt.  However, it is still worth it when zero percent interest is available for two years.  As an alternative, if it is unlikely that you will be able to repay a significant proportion of your debt during the interest free period then switch to a card with a low rate of interest for the duration of the balance transferred.
4. Avoid incurring fees for missed payments, which generally cost in the region of £12.  Furthermore, avoid treating your credit card as a cash card, which can be an expensive way to borrow money due to the additional charges.

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Homeowners who are concerned about carrying expensive credit card debt throughout 2012 could consider taking out a secured loan.  One of many finance options available, a secured loan could allow borrowers to tie up multiple credit cards into a single monthly repayment, which could be lower than the sum of current outgoings.  Interested homeowners could use a secured loans calculator to work out their monthly secured loan repayments if desired.  However, if opting for a secured loan to consolidate debt, it should be remembered that consolidating your debt may increase the amount you pay back overall and extend the repayment periods of your debts.