Credit Card Debt Articles
If you are looking for a mortgage but have a problem with credit card debt then this section of the site may well help. Here you will find links to our credit card debt articles which explain the facts you need to know before making any kind of decision about which mortgage is best for you.
Let’s start with the basics of credit card debt
Credit card debt is increasing, as credit cards are becoming easier and easier to obtain, balances are rising, and people are using one credit card to pay off another. Managing credit card debt wisely will help your finances stop spiralling out of control.
The main problem with credit cards and credit card debt is that they make it very easy for you to spend money. Because the company issuing the card gains interest on what you owe, it is in their best interests to lend you more money, so you can often find that your limit is raised time after time without you requesting it. This can make it hard to control spending, if you don’t know your card balance or the amount available on it. It can also lead to uncontrollable credit card debt.
To control credit card debt, always know how much you owe, and how much you can spend. Plus, how much you can repay. Keeping balances on credit cards is costing money in interest to the card companies, and credit card debt can be expensive.
Rates on credit cards vary enormously, so it is wise to keep a note of all your rates and transfer balances to lower rate cards when possible. Many card providers offer zero% balance transfer interest rate deals to new borrowers, so transferring your balance can save you a lot of money on your credit card debt. The 0% interest period will eventually run out, but while it exists, every penny you pay the card company goes toward reducing your credit card debt, not into their profits!
If you only paid off the minimum amount every month, how long would it take you to repay the credit card debt? Most people have never worked this out, but it might be longer than your mortgage! Pay sensible amounts off your cards, especially those with higher interest rates.
If you are thinking about taking out a new credit card, choose wisely. Look at the combination of 0% balance transfers if available, interest rates, and minimum monthly payments. So long as you can afford them, high minimum monthly payments are actually a GOOD thing, as they force you to pay more money off your credit card debt.
If you are not good at remembering payments, set up direct debits to pay your credit cards. But do this carefully. It is tempting to set up a direct debit for the minimum payment each month and forget about it. But that pays very little off the balance of your credit card debt. You need to supplement this with extra payments, which you can do manually by cheque or at the bank. The direct debit should be the MINIMUM payment, and then you pay extra.
But most of all, monitor your spending. For many people, credit cards are not “real money” and they lose track of how much they are spending all too easily. That’s why levels of credit card debt have risen so high.