pay off the debt

How to Take Control of your Credit Card Debt

How to Take Control of your Credit Card Debt

Credit card debt is one of the single biggest issues affecting people in the UK, as people are often tempted by the benefits of a credit card but then struggle to pay the necessary monthly repayments. From May 2012, the average amount of unsecured household debt in the UK was £7891, showing that there has been a substantial increase on the level of debt on 2011 and the 5 year period before 2008.

Usually it is the convenience of credit cards which makes them more appealing to use when the cash flow is running low. Unfortunately for those who use them, there is a high rate of interest associated with them that can be difficult to repay over time.

Not only do these reasons suggest why credit card debt is so high in the UK, they also make it extremely difficult for individuals to repay their liability. With many more people unemployed or being made redundant, it is clear that those in credit card debt don’t always have the disposable income to pay off the debt on a regular basis. It is only those with a proactive and determined approach to saving that will be able to overcome credit card debt in the future.

Consolidate your debt

If you are in debt with a number of credit cards, it can be even more difficult to accept more than one individual liability, and make multiple repayments when your money is tight. When managing your debt, try to pay off each credit card one at a time and once you have settled the account, close it down. Alternatively, you could also transfer your balance onto one credit card to ensure that you can manage your money in one place.

Try to shift your debts onto a 0% credit card and either pay it off before the 0% term expires, or shift the balance to another card before the interest kicks in. If you can’t get approved for a 0% card, a low-interest card (5-10%) will still be lower than the APR on most debts.This will help to create one clear goal for you as opposed to trying to pay off debt on many credit cards. By working out the APR of each credit card you will be able to see which card needs to be paid off first.

If you are struggling to pay off any of your debt you could always contact the CCCS (http://www.cccs.co.uk/) and see if they can help as they can sometimes arrange for debts to be frozen or consolidated into a single manageable monthly payment.

Only spend what you can afford

Although credit cards can offer financial support and tend to be convenient for the user, they can encourage you to spend money you don’t have. A more effective solution to the problem of limited cash flow is to budget your levels of disposable income, and ensure that every penny you spend is accounted for and necessary. If you commit to only keeping cash, you will know exactly how much you are spending as opposed to feeling like you have an endless amount of money to spend on your credit card.

Make sure you can afford your repayments

If you are trying to pay too much on your credit card monthly bill repayments, you will soon find that you may be getting yourself into further debt. By implementing a strict budget each month you will know how much disposable income you have each month, as well as how much you have to repay your debt. Make a list of your income outgoings as well as a list of essential and non essential spending in order to see how much you can pay each month towards your credit card debt.

If any creditors call to ask about your debt, you will then be able to explain what capacity you have to make the repayments each month. Committing to manageable repayments will help you to regain trust with your creditors and as well as helping yourself to feel more confident with your saving methods.

Obviously, it is great if you can pay more on your minimum monthly repayments as this will help you to reduce your credit card debt much quicker, helping you to feel more relaxed and carefree about your financial situation. By dealing with your debt in this logical way, it is likely that you will learn from your experience and be more careful next time you are tempted to open a credit card.

This article was written by Debt Free Me; specialists in debt consolidation and financial management. Visit www.debtfreeme.co.uk for free advice on managing credit card debt and your finances.

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Eliminating Your Debt in Most Convenient and Creditworthy Way

Eliminating Your Debt in Most Convenient and Creditworthy Way

Debt consolidation has always been beneficial over bankruptcy as far as creditor’s interest is concerned.  Whereas in Chapter 7 or Chapter 13 bankruptcy, creditors get nothing or very little from the debtor, the debt consolidation system shows positive and systematic money management in favor of them.

Debt consolidation beneficial for both:

Debt consolidation in turn could be extremely advantageous for consumers as the consolidation company would negotiate the reduced interest rate, lower monthly payment, reduced balance, cut off late fees and finally set up the time to be debt free. So in the long run the consumers can save large amount of money. Secured loans like car loans or mortgage loans don’t come under consolidation. Unsecured loans like bank credit cards, department store credit cards can be put into debt consolidation program.

Finally from creditor’s point view, dealing with debt Consolidation Company is beneficial. Here at least the consumer is showing an honest, strong effort to pay off the debt. And, by avoiding bankruptcy debtors can preserve their credit background.

Now for a consumer who is under severe debts pressure can look for either wiping out the debt in total or repaying it over a period of time. So which one to opt between both of the options – Bankruptcy filing or Debt consolidation? If it is the bankruptcy, it permits consumers to remove all of their debt and start fresh. If it is the debt consolidation you can make one payment to a debt consolidation company who in turn would combine your unsecured debts and disperse the funds for you.

Let us analyze which one looks smart and yet creditworthy?

Bankruptcy filings have many odds:

Initially from financial point of view bankruptcy may seem advantageous. But it is not that easy to file a bankruptcy and get relieved from massive dues with little effort. Even if it is Chapter 13 bankruptcy you won’t be complete debt free, it just extend the tenure of the repayment according to your convenience. Moreover Chapter 7 discharge doesn’t apply to the debts created after the bankruptcy filing or so. And, the most negative aspect is the destruction of consumer credit background. Consumer looses the creditworthiness which can pose many problems in future.

Usually after a bankruptcy, a creditor has difficulty establishing credit to the debtor for next seven years. Even if a creditor proposes to extend credit, the interest would be high and credit term would be less for the debtor. Thus from a consumer’s point of view also bankruptcy have several side ill-effects.


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