Monday 8th of March 2010
If you only ever repay the absolute minimum on your credit card debt then you could be surprised to hear how this financial technique can cause a huge headache for you, although you may find an individual voluntary arrangement (IVA) answers this.
A typical £1,989 credit card bill repaid at the minimum of 2.5 per cent every month would take you 22 years and ten months to clear, moneysupermarket.com says.
Furthermore, interest will climb to an average £2,490. If interest repayments are a constant battle for you then an IVA could help.
IVAs freeze the interest on unsecured debt like credit cards, meaning a lower percentage of your income may go on meeting interest repayments.
The website explains that if you pay just £20 a month more on the typical credit card balance, it will take you five years and seven months to clear - a more than 17-year reduction.
"It goes without saying that if you are paying just the minimum amount on your credit cards then you should seriously review your situation," suggests Peter Harrison, credit card expert at moneysupermarket.com.
By Kim Parsons
- 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
- Credit card firms 'hiking interest charges'
