Store and Credit Card Debts
Credit cards are a very convenient method of payment and a flexible way to borrow money, but the ‘buy now, pay later’ way of thinking needs to be carefully controlled to avoid impulsive spending and the potential descent into serious debt.
Store card and credit card debts can grow to become unaffordable very quickly if you do not have a plan in place to repay the balance. This is especially so if you use multiple credit cards and store cards.
Store card debts and how they mount up
The way in which store cards are marketed – presented in-store as a way to save money on purchases made at the till – makes them very enticing, as many offer a significant discount at this point.
This clever marketing comes at significant cost for many people, however, as extremely high interest rates are charged on store cards if you do not pay the balance in full. In fact, some providers charge interest rates of up to 30% or more for outstanding balances.
This contrasts with credit cards, which, although also associated with high interest rates, offer an interest-free period of around six weeks, and then generally lower interest rates on the balance when compared with store cards.
Credit card debt
Credit cards are the most common form of personal debt in the UK. Although often viewed as ‘safer’ to use than store cards, credit cards can still create significant financial problems if you are not aware of potential issues.
Losing track of how much you are spending on your cards, exceeding your credit limit, or only making the minimum repayment each month, can all quickly lead to burgeoning debt. Ongoing creditor pressure can be relentless in this situation and it is easy to find yourself in a serious financial position, particularly if you also owe money to other creditors.
It is possible for creditors to petition for your bankruptcy, either as a group or individually if you owe £5,000 or more in unsecured debt. This is why it is crucial to be proactive in seeking help.
Avoiding credit card and store card debt
The best way to avoid this type of debt is to be aware of your financial limits and make sure you have a firm plan to pay off the balance as soon as possible, either at the end of the month, or in the case of a credit card, when the interest-free period ends.
If you take out a store card to receive a discount on your purchases, it is advisable to pay off the balance as soon as possible, put the card out of sight, or destroy it so you are not tempted to use it again.
How we can help you deal with credit card and store card debt
UK Debt can offer valuable support and professional guidance to help you deal with these types of debt. We will assess your financial situation and present all your options to pay off the money you owe, whether that is achieved through unofficial negotiations with your card providers or via an official debt remedy.
Free initial consultation
We can arrange a free same-day consultation to quickly establish your position and the most likely routes out of debt. This proactive approach limits the amounts of further interest and charges added to your debt, and offers a little peace of mind in a stressful situation.
Contacting your creditors
As licensed insolvency practitioners, having assessed your financial capacity we can instil confidence in creditors of your ability to repay given a little more time. The unofficial nature of negotiations means you do not have to enter formal insolvency, and can make more affordable repayments taking into account your essential living costs.
Official debt solutions
You may be eligible for an Individual Voluntary Arrangement (IVA), which offers protection from creditor legal action, and freezes all interest and charges on your debts. IVAs offer an alternative to bankruptcy for those in serious debt, and allow repayment over a period of four or five years, with any debt remaining being written off.
If you have credit card or store card debts and are finding it difficult to repay, please contact one of our licensed insolvency practitioners to arrange a free same-day consultation.