Friday 10th of July 2009
Britons who rely on their credit card have been advised to use one for spending and one for debt, although some borrowers might want to start streamlining their credit card balances with an individual voluntary arrangement (IVA).
According to MoneyWeek writer Ruth Jackson, outstanding debts should be transferred to a zero per cent interest deal, while purchases should be made on a credit card with a low annual percentage rate (APR).
Individuals who face high credit card balances should always pay off more than the minimum when their bill arrives on their doorstep, she stated.
"Making only the minimum repayment is a bad idea in principle, as it is usually set at a small fixed percentage of the outstanding debt," Ms Jackson added.
IVA help may be required by borrowers who are unable to meet even the minimum repayments. An IVA can allow creditors to still receive payments, but at a level affordable for the consumer.
A recent report by uSwitch.com noted that the average APR stands at 17.3 per cent, which could hit those consumers coming to the end of a low-interest deal.
- 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
- IVAs could help those who borrow a third of what they save
