According to Credit Action almost sixty-six percent of Britons had seen their finances stretched by the current recession. It seems that 31% of households are now so worried about the state of their finances that they are considering missing essential repayments on credit cards, loans and mortgages. Research by Mintel has shown that over five million adults had already been 'hit hard' by the current economic downturn and are struggling to make ends meet. So it is understandable that people are seeking money saving experts for advice and help with their rising debt problems.
The Consumer Credit Counselling Service (CCCS) has said that fewer people are in a position to repay their debts: in 2008 only around 35% of clients were able to commit to a Debt Management Plan compared with 42% of clients in 2007 and 46% in 2006. They also suggested that clients seeking their help are becoming more affluent: twelve percent have a net household income of more than £30,000 a year and 47% of those seeking help were homeowners. Homeowners seemed to owe on average 83% more than clients renting their homes. The vast majority of CCCS clients owed money on credit cards and personal loans, with the average client owing £14,000 on each of these items.
Given that we have so much debt (loan, mortgage, credit card debt) and despair around today, it seems that a whole industry has grown up around helping people in debt to control their obligations to their providers by offering them debt solutions like Debt Management Plan, Individual Voluntary Arrangement and Bankruptcy. There are debt companies that charge an upfront fee and a monthly charge for providing their services and there are charitable debt organisations that are profit free and offer the client a free service. Before approaching any of these companies you should first speak with your credit card and loan providers to see if a deal can be arranged.
Recently a client of mine explained that he and his wife had spoken to their credit company about their £25,000 balance that was outstanding and their sudden drop in income. Their credit card provider asked them to submit a 'statement of their income and expenditure' and then they agreed to a monthly payment of £50 with the interest being frozen. They had originally been paying £500 a month. What a result!
I have since spoken to a number of people in similar circumstances who have found that their credit card providers were willing to talk to them in order to find a solution. One credit card provider offered to freeze the interest rate and to reduce the payments down for a period of eight months initially. Whilst another provider was willing to freeze the interest rate and to divide the debt by 120 months (ten years) as long as the client agreed to continue paying the debt off. Other finance providers were willing to talk as long as you were honest and open about your circumstances.
This advice is only worth following if you are able to pay a reasonable amount towards your debt each month. If you are unable to make a reasonable payment then you should consider approaching a debt management company or organisation for help and guidance. What ever you do don't stop making a payment to everybody you owe money to and do talk to your creditors first. If you just stop paying them they will hound you with phone calls all day long and then they will sell your debt to a company that will now start knocking at your front door to retrieve their money. What ever you do don't stop paying your mortgage or any secured loans as this will result in you losing your home through repossession.
I have purposely not included the names of the credit card companies as they all offer different solutions and just because they offered one person a solution does not mean that you may qualify for the same solution due to your circumstances. Be cautious of any debt help where you are advised or cajoled to go down the bankruptcy or the Individual Voluntary Arrangement (IVA) route as a quick solution. A debt solution should be a structured way to get out of debt and it needs to be right for your circumstances.
To Pay Credit Card Debt
Credit card debt is the Number One of debt issues that is not just affecting American households but worldwide in general. Many people are drowning into credit card debt and find themselves hard to get rid of it. If you are in the same situation, praying and hoping for helps from money falling from sky will not save you from continue drowning in the sea of debt. You action to start a debt elimination plan in place is your only way to save yourself from your debt issue. Here are 2 tips to minimum your credit debt that you should consider in your effort of get rid of debt.
1. Don't Add New Debt While Clearing Your Old Debt
Every one likes to use credit card for purchases because it's convenient and easy, until you forget about how much money you have in you account and overspend your money. When credit card bills come, only you realize that you have not enough money to pay the amount stated in your credit card statement, you have no choice but paying minimum due to fulfill the credit card agreement requirement. Later, you go out from shopping, again you forget about your financial status and spend again with your credit card.
If you continue this spending behavior, your credit card debt will continue to go up instead of reducing the amount. There is no way to get rid of you debt if you don't get rid of you credit card first. Hence, if you find that keeping away your credit cards are too hard, take a dramatic action by terminating all your credit cards and exchange them with debit cards so that you only can spend up to the limit where your checking account allowed. Before you call up the banks to cancel your credit cards, read the fine print of your credit card agreement first because some banks will increase your credit card interest rate if you cancel their cards with balances.
The first action to get rid of your credit card debt is to get rid of your credit cards so that you can avoid from adding new debt into your existing debt amount.
2. Minimize The Interest Rate & Avoid The Finance Charges
Credit cards carry different interest rates. If you pay your credit cards' balances in full each month, then, you don't really need to care about the interest rate. But, now you are in debt, every extra of interest rate will make you pay more. Hence, list down all your credit card debts and their balances. There are a few options that you can use to minimum the interest charged to your debt. Credit card debt consolidation into few cards with lower interest rate is one the options. Another way is getting a debt consolidation loan which has lower interest rate to pay off your high interest credit card debt. After the credit card debt consolidation, your credit cards now have a full credit limit again. Don't let yourself be trapped into new debt with these credit cards again.
By combining all your debts into single debt under debt consolidation process, you will have a better focus to pay of your credit card debt and transferring from high interest debt to lower interest debt will save you a good amount of interest. With debt consolidation, your overdue debt will reset back to current and help you to avoid paying the overdue or delay finance charges.
Summary
Credit card debt can be built up really fast, but it won't go away that quick and it won't go away if you have done nothing to resolve it. The first step of get rid of your credit card debt is reducing it by avoiding new debt added to it and minimum the interest from rolling up your debt.
Both Mark Aucamp & Cornie Herring are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Mark Aucamp has sinced written about articles on various topics from Finances, Sell Home and Free Credit Report Score. Contributing author Mark Aucamp has been providing Talk Money Blog with regular advice and comments. Mark has extensive experience in providing Debt. Mark Aucamp's top article generates over 9900 views. to your Favourites.
Cornie Herring has sinced written about articles on various topics from Credit Cards, Financial Planning and Free Credit Report Score. Cornie Herring is the owner of . Visit Cornie's website to see more information on. Cornie Herring's top article generates over 49500 views. to your Favourites.
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