Most people we assist at the debt help charity owe money to their credit card company, so you're not alone. The majority of people will have at least one credit card and many have multiple debts to different companies.
So, what happens when you want to pay off your credit card? How should you go about becoming debt free from credit card debts?
At Debt Support Trust, our not for profit advisors are here to help explain all of your applicable debt solutions.
If you're having financial problems because of credit card debts, then it's important to seek debt advice from a registered charity.
Struggling with credit card debt can vary from using credit to pay the minimum payments towards your cards, through to being rejected for a balance transfer. Whatever problem you're experiencing, we can help you.
Debt Support Trust helps people throughout the UK with debt problems and can help you on 0800 085 0226. You can also complete our debt test to get debt help.
If you can afford to repay your credit card then we would advise you to do this. But, if you're struggling to pay off your credit card debt then you may need debt advice.
The first sign of a debt problem with your credit card may be that you're only able to repay the interest each month. This would mean your credit card debt won't be repaid but you'll be maintaining your obligations to meet the minimum payments.
Our charity advisors have helped thousands of people with their debt problems and we continue to provide debt advice which helps to deal with credit card debt problems.
Debt advice helps you to understand which debt solutions would be most applicable for your situation. In all debt solutions we look to ensure you're paying what you can reasonably afford each month, so you will eventually be free of money worries.
The traditional methods of repaying credit card debt include making a payment over the phone or internet towards your bill, but when you're simply covering the interest the debt isn't reducing. If you've balanced transferred until you can no longer get any further credit then you will typically need another solution.
At this stage, we look at the root cause of the credit card debt. What is the problem and how can we best fix it?
There are lots of credit card debt solutions we can use to help deal with the money problem but it's essential the debt solution is suitable for your circumstances. As a result we would consider your income and expenditure each month to understand how much you can realistically afford to pay towards your debt. We then review your assets (house, cars etc) to determine if there is any equity as well as listing the outstanding debts.
We can then provide tailored debt advice specific for your situation. There may be two or three debt solutions to choose from and the decision will be entirely yours.
The range of debt solutions available for credit card debt will vary depending on your specific situation. You may be suitable for:
Debt Management: An informal debt solution where debt, interest and charges are requested to be frozen. You would repay all of the debt.
IVA: A formal solution which, if agreed by the creditors, will mean you will pay back what you can afford over a 5 year period. After the IVA agreement has completed then any outstanding debt will be written off.
Protected Trust Deed: The Trust Deed is similar to the IVA but only for people in Scotland and lasts for 3 years.
Bankruptcy: There are various ways to enter bankruptcy and this could be the best option for credit card debt.
You can take the first step to getting debt free by telephoning 0800 085 0226 and speaking to our debt charity. Alternatively, complete our online debt analyser below for a debt solution in 10 - 15 minutes.
A credit card is a form of borrowing so you can have money in advance. Your bill will arrive on a certain date in the month and you will be required to pay at least the minimum payment. Depending on your agreement with your credit card company, if you don't pay off the balance in full at the end of the month then you will be charged interest.
Credit cards essentially allow you to buy now but pay later. These cards are not linked to your bank account and they allow you to purchase goods over the phone or on the internet, as well as in shops. You also could take advantage of using the cash advance from the credit card from bank machines, although this will come with an automatic fee. The credit card company will carry out a credit check to make sure the person applying could afford to pay back the money once you start using the card.
You need to be careful when using your credit card. While there are benefits of credit cards, if you get into financial difficulty you will need a route to repay the debt.
If you do not pay off your outstanding balance in full by the date shown you will be charged interest on the bill for that month. The rates of interest can be very high. If you also take cash from the card you are charged a daily interest from the moment you take out the cash to the time you pay off the card in full. This can be a very expensive way of borrowing money. If you are unable to pay your bill then you could quickly struggle to manage your finances.
If you have credit or debit card debts then our qualified debt advisors can help.
You can email our team or telephone 0800 085 0226. Credit card debt can be included with an IVA, Trust Deed Scotland, debt arrangement scheme, debt management plan or bankruptcy.