Tuesday 9th of March 2010
Credit card holders who owe more than £15,000 may want to quickly get their questions on individual voluntary arrangements (IVAs) answered, as one financial expert asserts the importance of clearing debt fast.
Peter Harrison, credit card expert at moneysupermarket.com, says people who rely upon switching their plastic debt between zero per cent interest rate credit cards could soon find their financial tactic becomes unstuck.
This is because once the interest-free period comes to an end, they may find themselves lumbered with a high annual percentage rate.
Where previously they simply moved to another zero per cent credit card, lenders are increasingly picky when it comes to who they allow on to their borrowing books.
And people with high levels of credit card debt may find the doors to their lenders are closed in their face, indicating an IVA may be required.
IVAs can freeze the interest rates on different credit cards and merge the debt of more than £15,000 into one, monthly and more affordable sum.
Rather than wasting energy on keeping track of a number of different balances, borrowers may find that with one repayment to make, it is easier to control and manage unsecured debt.
Mr Harrison also suggests that people get help regarding their debt if they find they cannot keep up.
This may include getting some answers on IVAs to discover whether they are ideal for their financial situation.
He states: "We know that times are tight for many households and some credit cardholders may just be repaying the minimum amount every month as a way of trying to minimise their outgoings.
"It goes without saying that if you are paying just the minimum amount on your credit cards then you should seriously review your situation."
An assessment of finances may reveal to some individuals that repaying credit card debt through an IVA is a realistic way to clear what they owe over a longer period of time.
By Chris King
- House price rise 'may not indicate recovery'
- Equity release 'needs to be increased'
- Need for IVA help could increase as expert predicts reduction in lending
- Government announces 'breathing space' for those needing IVA help
- Lack of subprime lending creating need for IVA help, expert suggests
- IVA answers could benefit those with shrinking disposable income
