Wednesday 8th of July 2009
Plans to curb sky-high credit card interest rates will take some time to implement, it has been said, although borrowers may want to use an individual voluntary arrangement (IVA) to start reducing interest repayments as soon as possible.
Writing for MoneyWeek, Ruth Jackson advised Britons to never treat their credit card as a debit card and that they should only use it to withdraw from cash machines in an emergency.
Money taken from an ATM using a credit card accrues interest the moment it is withdrawn and she noted that interest rates could reach 30 per cent annual percentage rate.
Borrowers who obtain IVA advice may be told that an IVA can freeze interest repayments for credit cards, which could support people in paying back what they owe.
"The same goes for credit card cheques - they won’t be banned until October - the interest rate is usually extortionate, so don’t use them," Ms Jackson stated.
It was recently announced by the government that it is set to stop the sending out of unsolicited credit card cheques by lenders to borrowers.
- 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 support could replace old credit card crutch
