Control your credit card debt

4 December 2009

One of the most important things to look at when it comes to any kind of borrowing is the interest rate. The higher the interest rate, the more interest you`ll pay per month, and the faster your debt can grow if it`s left unpaid.

This isn`t exclusive to credit card debts, of course - but with an average interest rate of around 18%, credit cards can be a particularly expensive form of debt.

A major advantage of credit cards, though, is that if you repay the balance on time, you`ll never have to pay any interest whatsoever. But if you allow any of that balance to cross over into the next month or beyond, you will be charged interest.

That`s not necessarily a problem, as long as you can afford it. But if you have high levels of credit card debt, it can be very hard to keep up with the interest payments, let alone pay off the rest of the balance.

What can I do about problem credit card debts?

If you think your credit card debts are getting out of control, there are a number of steps you can take to improve your situation.

Overpay

As long as you can still comfortably make your minimum payments, it`s a good idea to `overpay` your credit card debts - to pay more than you`re required to each month. This can seriously reduce the amount of time you`re in debt, and the amount of interest you`ll pay before your debt is cleared.

So, calculate how much extra you can afford to pay per month, and pay that to the credit card that`s charging the highest interest rate.

Note that you should only do this if you can afford to stay on top of all your other financial commitments as well - there`s no point paying more towards one debt if it means you`re falling behind on others.

Contact your credit card providers

If you are having problems making even the minimum monthly payments towards your credit cards, you`ll need to speak directly with your card providers to arrange some kind of repayment plan. Most lenders will accept reduced monthly payments if they can see that it is the most realistic way of them getting back the money they are owed, although this will have an effect on your credit rating.

However, be aware that this approach will mean you`re repaying your debts more slowly and it may mean you end up paying more interest overall. Having said that, your providers may agree to freeze interest on your debt, so it`s not growing as you`re trying to pay it off.

Speak to an expert debt adviser

A debt adviser can help you find an approach that could help you to clear your debts at a pace you can manage.

There are a number of debt solutions available, each of which is suited to people in different situations. Even if you can`t ever see yourself repaying the debt in full, there may be a debt solution that could help.

For more information on controlling credit card debt - or any other kind of debt - click here or call us today on 0800 074 8639.

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