'Use savings to pay credit card debts'
Posted by on 9th March 2010 to Debt News
People faced with mounting credit card debts should pay off the huge rates of interest with their savings, according to finance experts.
Last week, it was highlighted that consumers in the UK are in a total of £65.1 billion of debt with credit card companies.
Moneysupermarket.com reports that the average credit card debt of around £1,989 will take 22 years and 10 months to pay off with the monthly minimum payment of 2.5 per cent. Paying an additional £20 a month could cut that payment term down to five years only and save an interest charge of £2,490.
Given that most savings accounts are currently earning very low rates of interest, those with debts would be better off paying off the much higher rates of interest on credit cards.
Peter Harrison, credit card expert at the site, said: "It goes without saying that if you are paying just the minimum amount on your credit cards then you should seriously review your situation."
He also pointed out that switching between different cards with 0 per cent interest was a risky strategy as failing to pay off the balance in time could mean more debt in the long-term.
Posted by Clement Moine
Debt Free Helpline offer debt management plans as well as a range of other debt solutions. If you are worried about debt, contact one of our trained debt advisers today.
Last week, it was highlighted that consumers in the UK are in a total of £65.1 billion of debt with credit card companies.
Moneysupermarket.com reports that the average credit card debt of around £1,989 will take 22 years and 10 months to pay off with the monthly minimum payment of 2.5 per cent. Paying an additional £20 a month could cut that payment term down to five years only and save an interest charge of £2,490.
Given that most savings accounts are currently earning very low rates of interest, those with debts would be better off paying off the much higher rates of interest on credit cards.
Peter Harrison, credit card expert at the site, said: "It goes without saying that if you are paying just the minimum amount on your credit cards then you should seriously review your situation."
He also pointed out that switching between different cards with 0 per cent interest was a risky strategy as failing to pay off the balance in time could mean more debt in the long-term.
Posted by Clement Moine
Debt Free Helpline offer debt management plans as well as a range of other debt solutions. If you are worried about debt, contact one of our trained debt advisers today.
