Credit Card Debt

Warning: Late repayment can cause you serious money problems

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Representative Example: Representative 1286.98% APR on a loan of £300.00 with 5 monthly repayments of £101.03 Total amount repayable £505.13 Annual interest rate (fixed) 290%

 

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Author: Internal Marketing Department

 

Credit card success us dependant on self-control. Some people can't resist the temptation to go out of bounds on a credit card. Not keeping a track on your spending, to not paying off your bills on time, accepting credit limit increases when you don't need to. To better the situation, you must identify what is suitable to put on a credit card and what should only be bought when you can afford it. Practice some serious self-control when it comes to managing your cards. Some of the common pitfalls are below:

·       Ignoring debt:

Some people get stressed out by the bills and act like an ostrich in a sandstorm. They simply stop looking at the bills while pretending the debt is not there. This does not stop the interest from growing, and the longer you put off paying the bills, the worse your situation will get. Are you expecting us to say this works for a while? No, it doesn’t. Not for a month, not for a minute even. If you are overwhelmed by the bill, call the credit card company and negotiate. You could get a new payment plan fitting your earning. Sometimes certain fees even get waived, so don’t ignore the debt take steps to confront it. If you don’t get through on the first call because they are busy, keep calling them. You will reach one customer service representative who could be able to help. Help is just a call away. The most dangerous aspect of ignoring your debt is, the creditors can give up hope on you and call-in debt collectors in action, and their tactics is a sure shot way to turn your stress into downright depression.

·       Late payment:

Paying late just increases the amount you need to pay. Seriously, you are not saving up the money by paying less and paying late. What you don’t pay off acquires interest and pulls your credit situation down.

·       Don’t ignore billing statements:

This could be lethal for you. Ignoring the statement means you miss out on the payment date, whether there were any unusual credit activities in your card which is the first sign of a credit card fraud, and any major policy changes by the company. Make a habit of reading your statement, check all the purchases are valid or not.

·       Getting your card defaulted off:

For those who are not familiar with what a credit card ‘default’ is, it is what happens to your card when you stop paying the bills for 6 months, and it isn't good. A charge off will mess up your credit score badly, you will be picking up the pieces for years afterwards. The charge off reports stay in your credit history for 6 years.

·       Not knowing the terms and conditions:

Knowing the small details of how the credit card company is going to handle your bill is a knowledge you should not pass off. Knowing the terms gives more power to you over your bill, you know what to do and what not to do, the late payment charges, the penalties for missing fees; all these just by reviewing your credit card terms. Check at least every year to see if any major policy changes have happened. You could find the terms on the bank’s website or simply call up customer care.

The problems could be uncountable when you misuse a credit card. But simple solutions could provide you a lot of space to breath.

Try not to have more than one credit card; the more cards you have, the more debt you have and the time and interest rate everything just keeps on accumulating. When you understand how this is working out in your favor, having just one card, proceed to the next step. Pay as much money per month as you possibly can to pay off the debt. Don’t go for the minimum payment trap, it will prolong and intensify your debt even further and you don’t need all that. 

If you are in trouble, try to get help from creditors. Sometimes they might agree to work out a negotiation or at least a modified payment plan.

If you can, try to pay at least two payments monthly. The creditors charge interest on a daily basis and this will be a major help in cutting off your interest amount. The faster you can reduce your daily average balance, the more you save on interests. If you are on a really tight budget, pay once on your pay day. Then after two weeks, take a reassessment on how much you could save up and pay some from that amount in your credit card bill.