Sound familiar?
- Are you working a form of financial wizardry on a monthly basis, but making no headway in paying off credit card debt and personal loans?
- It’s a more common scenario than you may think!
During the late nineties and the early naughties, credit card companies were only too keen for us to have ever larger credit limits, more accounts and more authorised users.
This, coupled with the introduction of balance transfers to the UK meant that consumers had increasing opportunities to borrow more and increased scope to move these borrowed funds around the various UK credit card providers.
- This practice was given the somewhat seedy title of being a ‘rate tart’, but has become increasingly harder in recent years owing to a number of factors.
Firstly is the recent tightening of credit risk policies that has followed the credit crunch. This has meant that constantly rising credit limits has halted and in some cases account limits have been reduced. There has also been a reluctance on behalf of the credit card companies to open accounts to customers who already hold several credit facilities with other credit providers.
Indeed a report published by PaymentsCM in 2007 suggests that the volume of accounts, cards issued and active accounts was on the decline towards the end of the naughties, a trend that a report by Datamonitor supports which highlighted a drop in value of £10.9 billion in the UK credit card market in 2009 and 2010.
In recent years it has also become harder to benefit from low-interest or interest-free balance transfers as increasing numbers of credit providers apply a percentage charge to balance transfers, meaning that whilst you avoid interest, you can typically pay between £100 and £200 to transfer a balance of £5,000.
Whilst the interest rates are still low or zero, these charges do make the overall cost of credit more expensive. There are also increasing terms and conditions that accompany such deals, meaning that if you miss your monthly repayment or are the mere matter of a day late in making a payment, then the promotional interest rate is revoked in favour of the standard rate of interest.
- So what should you do if you are caught in the trap of stable or increasing credit card balances?
First and most importantly you should seek to understand all of your credit commitments across credit cards, personal loans and overdrafts. Once you have a clear picture of these and the amounts that you are paying or transferring each month, you can start to review your approach to repaying credit card debts and improving your financial health.
- One call to our financial management consultants at Lewis Alexander can also help.
Lines are open 24 hours a day and you can call free using 0800 018 6868, our debt consultants can help you start to make progress towards reducing a debt problem. By completing a financial healthcheck, we can assess your financial situation and provide recommendations for intelligent monetary management.
It may be more beneficial for you to prioritise your repayments and repay certain creditors first. It may also be possible to consolidate some of your borrowings into one loan, or even renegotiate the credit terms that you are currently committed to.
- The above options could help you to repay your debts more speedily and may also reduce the credit balances that you owe.
- Remember, through our debt management online advisors, help with debt is one free phone call away on 0800 018 6868.
Call Lewis Alexander now to start making improvements to the way that you manage your financial health! Our specialists are waiting for your call, so contact our personal debt helpline using 0800 018 6868 today!
