Managing Credit Card Debts

Credit cards are one of the most convenient and costly forms of credit available to British consumers today.

They are easily available, easy to use and provide a quick and easy source of cash. If properly used, they can be a rare source of free credit. However, if abused they can turn out to be a very expensive luxury.

Prevention is better than cure. If you are lucky enough not to owe anything on your credit card, or are thinking of getting one for the first time, there are steps you can take to stay debt free.

Credit card interest rates generally range from about 14 to 18 percent. However, all credit cards offer an interest free period. This is usually 58 days from when the last statement was issued. Make sure that you know when this date falls and make sure you pay off your balance before then. If you can maintain this, you will not pay a penny in interest.

Also, many credit cards offer special introductory rates of 0 percent for the first three months. Again, this can be a convenient source of credit but make sure you have paid off the balance before the introductory period expires and the hefty interest rates kick in.

Keep your credit limit in mind. Most credit card companies will allow you to exceed this limit but fine you for the luxury. In addition, do not use your credit card as a source of cash. Interest is charged immediately on cash advances in most cases.

Unfortunately, many of us have run up heavy credit card debts by the time we realise there it has become a problem. And because interest rates are high, it is sometimes a struggle to pay the interest alone.

If you have incurred large debts on one or a number of credit cards, it may be time to consider debt consolidation. This involves taking out a standard loan to pay off your credit card debts. The advantage of this is that interest rates are significantly lower, saving you money in the long run.

Another option to relieve yourself from high interest rates and buy you some time is to transfer the balance of your existing credit card to a new credit card and take advantage of its introductory interest rate. Many credit card companies charge fees for this but there are some good deals out there.

If you feel credit card debt is going to be a long-term problem for you then it may be time for extreme action. Once you clear your debts it is vital that you only use your card within your means. If this is not possible, consider cutting up your cards.

As mentioned, credit cards offer a quick and easy source of free credit and seem almost essential for today’s living and shopping online. However, they remain one of the most common causes of debt problems for British consumers, so spend wisely.