A recent survey carried out by lending group Zopa shows that the average Britain has £4,500.00 of credit card debt. The average interest rate or APR of 17.9% means it would take as long as 17 years to pay off this debt if only the minimum repayment on a debt of £4,500.00 were paid each month. Worryingly, this survey found that 20% choose to pay the minimum repayment each month. 55% of credit card holders in the UK are unaware of the interest rate on their credit card and nearly all underestimate how long it would take to pay off their current debt.
The survey also indicates that credit card debt is having an effect on people’s lives’ and not simply in a financial sense. 61% admit that their credit card debt is unmanageable and just over a quarter (26%) feel overwhelmed. 20% claim that they have trouble sleeping and 18% admitted that their credit card debt had caused arguments within their family.
Managing Debt – What are the Steps?
If you are faced with a credit card debt that is not going down there are a number of things you should do.
Firstly, you should take a close look at your expenditure, are there any areas there where cutbacks can be made? There are a lot of budgeting tools that can assist on the internet.
The next step is to carefully log all the essential expenditure you have each month. This would include mortgage or rent and essential bills such as Council tax. Living expenses then need to be accounted for. Again, there are income/expenditure sheets, otherwise known as financial statements, on the internet to assist.
Once all expenditure has been accounted for, any surplus money available can be put towards repaying unsecured debt. If there is less money available than monthly contractual payments to unsecured creditors then it may be time for a debtor to seek further professional advice.
This advice is, and should be, available for free. Certainly contacting me, Mark Skinner, at Farleys Solicitors is one option – I offer free, confidential debt advice. I am a Personal Insolvency Solicitor and Debt Advisor and can quickly identify which is the best option for a debtor. This may include an Individual Voluntary Arrangement (IVA) or Bankruptcy and I am happy to give advice and assist at any time. Please call us today, or alternatively, you can send us an email, and we will respond to you as soon as possible.