Saturday, November 14, 2009
Category:
Consolidation
According to research conducted by moneysupermarket.com, 31 percent of credits card users do not intend to settle their outstanding balance during the course of the next six months.
It was also revealed that those between the ages of 20 and 29 are the least likely to clear their debts in the near future. In fact, 38 percent of credit card users within this age bracket have reportedly had an outstanding balance for over six months, and just 26 percent are paying off their total balance each month.
With the Christmas period looming, moneysupermarket.com points out that credit card purchases could cost far more than anticipated. For example, a £2,000 balance at an average industry rate of 18.21 percent APR, with repayments divided equally across six months, would result in interest of £144.19. This figure would rise to £188.79 over a period of twelve months.
Credit cards expert at moneysupermarket.com, Peter Harrison, commented: "Today's news on soaring bad credit card debt, coupled with our research findings, set a very worrying scene. People must be extremely careful about carrying debt on credit cards for long periods of time - you don't want to be paying for this year's presents when the Christmas decorations are rolled out again next year; particularly as rates could be at new dizzy heights.
"With interest rates rising on many cards, minimum repayments often only barely cover the interest accrued on the debt. By paying just the minimum borrowers could spend most of their life paying a credit card company a monthly sum on a debt as small as £500.
"Those with credit card debt should look at ways to reduce the outstanding balance on their card, especially as providers have been known to increase APRs for longer standing customers. One way for borrowers to reduce their interest payments is by taking out a card with a zero per cent introductory offer on balancer transfers, affording them a better opportunity to clear the debt.
"Consumers should use a credit card for purchases over £100 as these purchases are protected under Section 75 of the Consumer Credit Act should anything happen to the goods; but borrowers should aim to pay off the item immediately or as soon as possible."
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Homeowners who are looking to re-organise their credit card debts could consider taking out a secured loan for debt consolidation. One of many finance options available, a secured loan for debt
consolidation could pave the way to a single monthly repayment as opposed to juggling several. This new monthly repayment could even be lower than current outgoings. However, when taking out a debt consolidation loan, it must be remembered that consolidating your debt may increase the amount you pay back overall and extend the repayment periods of your debts.
