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Credit Card Debt Help & Advice

Credit cards can be a great way to help you spread the cost of larger purchases, giving you the convenience of being able to buy an item immediately and pay back the balance in instalments at a later date. They can also be great for larger unexpected costs such as your boiler or your car breaking down.

However, it’s important to remember that credit cards are not the same as debit cards. It’s never a good idea to use them for everyday things such as cash withdrawals as there is typically a fee involved and a higher interest rate.

People commonly turn to credit cards for their larger purchases because they are protected by section 75 of the Consumer Credit Act. This section dictates that anything you purchase between £100 and £30,000 using a credit card is protected, meaning if the item is faulty or the company goes bust you will receive a refund from the card user.

However, you should remember that credit cards are a form of unsecured borrowing. If you don’t pay the balance off in full each month and choose to only pay off the minimum amount, the interest will start to mount up, meaning your debt can quickly spiral out of your control.

Average credit card debt in the UK

Bank data revealed in January 2018 that the average credit card debt in the UK has reached more than £70bn, this works out as £2,568 per household.

Interest charges on credit cards

Interest is calculated as an annual percentage rate (APR), many lenders will offer interest free periods – but watch out as this can encourage you to spend more- even if you have a card that orders free balance transfers or 0% interest, there are always costs involved.

Common causes for credit card debt

A credit card is a relatively simple form of borrowing, and, used wisely, credit cards are a great tool. However, if you aren’t careful, the balances can soon build up out of your control and quickly become a costly source of problem debt.

It’s easier than it seems to accidentally go over your credit limit, especially if you are struggling financially and become reliant on your credit card to get through the month. Exceeding limits incurs fees and often add additional interest to balances, making it harder to for the balances to be paid off.

When money is tight, it’s tempting to pay off just the minimum balance, but doing this will cost more in the long run and it will take longer to clear your debt. Your balance will steadily grow and if you do this for long enough, you’ll end up owing a lot more than you spent.

Much like exceeding your limit, forgetting to make the minimum repayment or paying it late will incur additional interest and charges onto your balance. This again will make you balance continually grow and become more and more difficult to pay.

Few things in life are certain, and sometimes even a small change in circumstances can result in you being unable make even the minimum payment towards your credit card. Stretching your budget to ensure everything is paid is a difficult task, and it’s often the case that this leads to events like the ones mentioned above.

Ways to stay on top of your credit card bills

Keeping on top of your credit card bills isn’t always as easy as it may seem, but there are steps that you can take to help ensure it doesn’t fall into a downward spiral.

  • Set up automated payments

If you have a large number of outgoings, it’s easy for some payments to slip your mind. Setting up a direct debit or standing order is the perfect way to make sure you always make the minimum payment and avoid additional charges.

  • Budget, budget, budget

Along with automated payments, creating a simple and easy to use budget is a great way to help you ensure you cover all your living costs plan for your credit card payments in advance, so you aren’t caught short when the time comes.

  • Make additional payments

If you can afford to, making extra payments on top of your automated ones will help you to clear your balance in a timely fashion instead of only paying the interest each month

  • Shop around

If you’re struggling to pay your full balance, use a comparison site to find a lower, or zero interest deal so you can pay off more of the balance each month.

  • Consolidate the balances

Consolidating your debts means you substitute multiple debts into one larger repayment. One method available to credit card holders is to transfer the balances of various credit cards to a new one. You can also take out a personal loan to consolidate your credit card debt into one manageable loan. However, always remember to check the fine print for additional fees, to ensure you don’t end up paying more than you need to back. Read more about debt consolidation here.

  • Get help to get the debt written off

If you need debt help and are struggling to pay your credit card debts there are various insolvency options here to help your write them off. If you live in England, Wales or Northern Ireland, you could benefit from an Individual voluntary arrangement (IVA)

If you are a Scottish resident, there are slightly different options such as a Trust Deed It’s worth noting these may not be suitable for everyone as they will have an effect on your credit file and there are some fees required.

If you are struggling to even make the minimum payment on a credit card, call us now for immediate and confidential free credit card debt advice. We can start to work through your debt problems as soon as you contact us. Our advisors are trained to provide the best advice for your situation.

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