In taking steps to clear off money owed on credit cards as soon as possible, people should find they have more cash to spend on purchasing items, it has been reported.
Claiming money owed on credit cards is “the devil’s debt”, Neil Faulkner writes in a lovemoney.com article that the less interest consumers have to pay on debt will free up disposable income.
One means of getting to grips with how much is owed, he states, is to seek out a 0% balance transfer credit card. By doing this, Mr Faulkner reveals borrowers will not have to pay any interest on the total amount they have transferred across for a set period of time, allowing debts to be repaid “much faster”.
The lovemoney.com writer also claims creating a budget to ensure more than the minimal repayments are made can be helpful, with setting up a direct debit to take money out of an online bank account an effective way of doing this.
An example of how credit cards can become difficult to pay off when simply making the minimum payment are demonstrated as follows - a card with £5,000 debt takes over 30 years to clear when paying the minimum amount off, incurring charges of over £5,000 in interest. However, if you pay back £200 a month you will find the debt takes 3 years to clear.
In doing so, he asserts consumers should be able to avoid the problems that can be caused in missing a demand for payment. Indeed, should one repayment be missed he points out competitive introductory rates could be lost and borrowers will be charged interest and fined.
Furthermore, a negative mark will be placed on a credit report, which could mean access to credit in the future could be a more difficult and expensive process.
Such claims come as Neil Munroe, external affairs director at Equifax, claimed that in the current financial climate people need to be as informed as possible when making an application for credit. Research by the firm showed requests for credit reports during the first quarter were up 9.6% compared to the time period of time in 2008.
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