Credit cards can be a useful way to make large and more secure purchases or even to help you get through that last week of the month before payday. However, it can be easy to fall into credit card debt as you are able to buy things that you don’t have to pay for (or worry about) at the time. Debt on the card can build up quickly and if you cannot clear it or miss your minimum monthly repayments, interest will start to accrue and you could be charged a fee for missed payment.
What happens if I am in Debt with my Credit Card?
Your creditor will contact you to ask for the missing payments to be made, and if you don't do this eventually the account will default and further action may be taken.
If you are late making credit card debt repayments, it will usually have a negative effect on your credit rating. Your credit profile makes a record of every late payment you make, and lenders will look at this to decide how reliable you are for making repayments.
A quick way to pay off your credit card debt is to gradually increase your repayments over a period of time. You should avoid taking out pay day loans or transferring your balance to another credit card as this can increase your debt levels due to the high APR and interest rates.
Paying the Minimum Monthly Amount
Creditors will expect you to pay a minimum monthly payment for the money you have borrowed, which often will be a percentage of the amount outstanding, usually between 1% and 3% each month and can be as low as £5.
Whilst this minimum amount can make the debt feel affordable for most, paying the minimum monthly payment is not a great idea. If a customer only pays back this small amount each month, interest charges will build up and the bill could take a long time to clear. That is why you should always try to pay more than the minimum amount if you can afford it, even if it is not by much, as it will make a huge difference.
The Money Advice Service have a useful calculator on their website which lets you check how long it would take to pay off a credit card debt.
Staying on top of Credit Card Debt
There are several useful tips you can do to avoid getting into credit card debt, things like;
Setting up a standing order so you always make the minimum payment.
Making an additional payment on top of that if you can afford to.
Setting aside enough money each month to pay back what you spend.
Using a comparison site to find a lower, or zero interest deal so you can pay off more of the balance each month.
If you are struggling to pay a credit card or have difficulty paying outstanding debts, please call Aperture, as we offer free debt advice. You can contact us free on 0333 939 7919.