More than 27.7 million plastic card purchase transactions were made each day during September 2012, representing a total value of £336 million. Between July and September 2012, approximately, 1,399 people reported becoming redundant each day.
This means that on any given day, thousands of people may be unable to repay their credit card transactions. During the third quarter of 2012 alone, UK building societies and banks wrote off £473 million in credit card debt for residents who were unable to repay it.
Take A Preventative Approach To Credit Card Debt
The best way to deal with credit card debt is to avoid accumulating it. Cutting up a credit card and canceling the account is the easy way to keep from using it. However, there are also ways to use credit cards responsibly to prevent debt from accruing.
One recommendation is to do the Christmas 2013 shopping now when high street shops have reduced prices by up to 75 percent. Shopping now can save hundreds on clothing, decorations, cards, and large-ticket items that will still be in demand next Christmas. Pay the credit card bill within the initial statement period so these gifts will not carry any interest charges.
Decide On A Pre-Paid Option
A pre-pay plastic card is a budget-friendly alternative to a traditional credit card. The cardholder can never spend more than the balance of the account, which can be topped off as the budget accommodates. This ensures that the cardholder will only purchase as much as can be afforded. If a credit balance is carried over to the following month, all the better! On months when finances are particularly tight, forego adding money to this card and spend only what can be paid for with cash.
Consumers can earn money for saving if they deposit funds into an interest-paying savings account. Interest rates have plummeted in recent years so look for competitive rates and switch accounts regularly to get the best deals. Instead of using the credit card for unnecessary purchases, deposit an equivalent amount of money into a savings account and watch it earn interest. This extra money will continue to earn until it is needed for an emergency expense or repair.
Interest-Free And Balance Transfers Are Back
After the financial collapse, it was almost impossible to find a decent balance transfer offer for a credit card. As of this fall, consumers with good credit can once again qualify for zero percent balance transfer deals. The credit card industry is engaged in a price war and spenders with squeaky clean credit are benefitting.
These cards are following two trends, one of which is a short term, interest-free period featuring a low balance transfer fee. Zero percent balance transfer periods of up to 23 months are also available for consumers who can afford a higher balance transfer fee.
Low-interest introductory periods are also resurfacing. As of November, MBNA was offering a credit card featuring zero percent interest for 14 months and a 1.25 percent balance transfer fee. For cardholders who can repay their balances over the short term, the NatWest card with zero percent interest for six months on purchases and 13 months on balance transfers is the best deal. The balance transfer fee on this card is only one percent.
Consumers who need more time to repay their credit card balances should consider the Barclaycard Platinum card featuring zero percent interest on balance transfers for a period of 23 months and zero percent interest for three months on purchases. A consumer could purchase furniture or a holiday on another card and transfer the balance to this card for a fee of only 2.8 percent. This will provide a nearly two-year deferred payment period at a minimal cost.
Be Diligent With Credit Card Statements
Credit card providers rely on the fact that some cardholders will not repay their balances before the interest-free period expires. To avoid becoming part of this group, cardholders should get their balances to zero as quickly as possible. If a balance remains when the grace period will soon end, they should transfer it to a zero-interest balance transfer card.
Cardholders should never miss a minimum payment because they will cease to qualify for an interest-free deal. Establishing direct debit for payments prior to the due date prevents having to pay the normal interest rate of approximately 18 percent.
By keeping spending in check, credit card holders keep their credit ratings high so they will qualify for the best deals. Credit cards should be used only when necessary, not as an excuse to overspend. View a credit card as an alternative to paying cash and repay the card balance as soon as possible.
When the statement comes, there will never be a moment of panic because the balance will be affordable and will not include any interest or late fees.