How To Stay On Top of Credit Card Debt

| March 4, 2013 | 0 Comments

Credit Card Debt

With the UK still feeling the effects of recession, it’s little wonder that more and more people around the country are seeing their financial situation become less comfortable as jobs are cut and living costs rise. With money becoming a more pressing concern. the temptation to turn to credit cards can be considerable, but they have their risks and keeping on top of any debts is crucial.

Credit cards are used by millions of people every day for purchases ranging from the weekly food shop to a new car, and they are often the most convenient way of paying for items. However, failing to manage finances effectively can result in debts quickly piling up and figures from Credit Action indicate this is becoming a problem for more and more of us.

Debt is growing

Latest statistics show outstanding personal debt stood at £1.42 trillion at the end of November 2012, up from £1.406 trillion at the same time a year earlier. Unsecured consumer credit lending – which includes credit cards – totalled £156 billion.

A total of £1.424 billion a day was spent on plastic card purchases in October 2012 and the UK Payments Council estimates the number of credit and charge cards in the UK exceeds the total population. The popularity of credit cards is not showing any sign of falling, so what can you do to ensure you don’t put your future at risk by racking up big debts?

How to handle it

The best advice to follow is to keep the possibility of falling into debt to a minimum by sticking to a budget and ensuring you pay off the balance owed in full each month. If this is not possible – for example if the card needs to be used for an emergency purchase – then pay off as much as you can and ensure you curb your spending in the coming months until the balance has been cleared.  Missing payments entirely should be avoided, as this could result in penalty charges being added on to the amount owed.

With many banks and other credit card companies offering deals it may be tempting to take out another card and use a balance transfer to pay off the card where debts have built up. However, this should be avoided, as while it may solve the short-term problem of one debt, it can lead to a cycle of opening new accounts that is difficult to break out of.

If you do find yourself struggling to pay off the amount owed on a card – especially if interest rates mean it is difficult to bring the balance down – there are still options available. Organisations such123 Debt Solutions can offer free advice on the options available to people who are dealing with large credit card debts.

One potential solution is filing for bankruptcy, which will see all outstanding debts written off after one year. However, keep in mind that assets owned by you may be used to pay off some, or a portion, of what you owe. If this approach is not suitable then there are other methods to consider, such as using a debt management plan to consolidate payments into one monthly sum – something that can be especially useful if money is owed to lots of different credit card companies and keeping track of balances is proving too difficult.

Category: Debt

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