Credit cards are one of the most common forms of debt. Few people are without at least one card in their wallet offering a specific amount of credit in return for a relatively high interest rate on any debt accrued.
As such, many people find it easy to get into difficulty with credit cards. Unlike other forms of loan, and providing a minimum amount is paid each month, the credit card provider will not usually be proactive in chasing debt – their business relies on generating revenue from interest, after all. If you have one or more credit cards containing balances which concern you, we have some valuable advice.
I don’t think I can clear my credit card balance. What should I do?
You’re not alone. But you should talk to someone. There are a number of debt help charities (such as Debt Support Trust) who will listen to your situation and provide valuable advice. We recommend talking to them first.
How do I pay off my credit card debt?
In order to clear your credit card balance, you need to ensure you are paying more than the minimum payment each month. The more you pay, the quicker the balance will reduce.
As with all forms of debt management, we recommend performing a budget. Look closely at your income and outgoings and cut anything from the latter which isn’t a necessity – you’ll be surprised by just how many non-necessities you spend money on which could instead be put towards paying off your credit card debt.
Investigate alternative card lenders. You may find a favourable rate, but make sure there is no hefty balance transfer fee.
Joint credit card debt
There is a common misconception about ‘joint’ credit cards. The truth is, there is no such thing; you are allowed to nominate another card holder, but any debt accrued on either card will be set against the original account holder. That means the second card holder isn’t liable. Think carefully before allowing someone to join your credit card account.
How will credit card debt affect my credit rating?
Like any type of debt, your credit card(s) will make itself known on your credit file. The balance owed, payment history and details of defaults will all be available to anyone checking your credit rating, so keeping on top of them is of paramount important.
Equally, if you apply for too many credit cards in one sitting, your credit score can be negatively impacted.
Final thought on credit card debt
Credit card debt may be a tempting way to spend above your means, but before doing so, ask yourself if you can afford the repayments and the interest which will accrue as a result. Don’t breach that threshold – spend only what you can afford. However, if you do end up in debt and you are concerned about your ability to repay, seek independent advice.