It is estimated that over 3 million consumers in the UK are caught in a credit card debt trap, unable to get out.
With high interest rates and fees, experts believe that these consumers can be paying as much as ?2.50 for every ?1 they manage to pay off the outstanding debt.
Here are a few tips to help control this cycle of debt misery.
Stop Using the Cards
By only paying the minimum amount per month, the debt will never be repaid. You must be able to pay a minimum of 10 per cent per month on outstanding balances.
Therefore, you must stop spending.
Do not take your cards with you. If you do not have them, you cannot spend on them. If you really cannot resist, then cut the cards up.
Assess Your Situation
You cannot begin to come up with a plan until you have checked exactly what you owe and what interest rate and fees are being charged.
Check Your Budget
Once you know your debt situation in full, then you need to check all monthly outgoings to see where you can make savings that can then be diverted towards paying off the debt.
Check to see if you can switch to better deals for household expenditure and cut back on non-essential spending.
If you can pay more per month it is amazing how much quicker you will be debt free by avoiding extra interest and fees.
There could be options to consolidate all your debts into one debt that charges far less.
One option could be to transfer debts to a Zero per cent transfer credit card where you pay a one-off fee and no interest if you clear the transfer balance within the introductory period. However, you must be sure that you won’t be tempted to build new debt on the card.
Another option is to take out a loan to consolidate the debts. With base interest rates at a historical low, there are many loans available at attractive low rates of interest.
Ensure that you can afford the loan repayments and this can give a structured route out of the debt cycle.
Most Expensive Debt First
If you have more than one outstanding debt and cannot consolidate as above, then make sure that you tackle them in order, starting with the debt charging the most interest and fees.
Most importantly, do not ignore debt problems. Free help is available from Citizens Advice. Or alternatively you can call the National Debt Helpline on 0808 808 4000
You can also get free advice from StepChange Debt Charity on 0800 138 111 or visit their website stepchange.org