The FCA announced new proposals recently to help millions of people resolve their credit card debts. With nearly 8 million people across the UK experiencing unmanageable debts and credit card debts mentioned as the main reason for using Money Advice funded free debt advice services, this is a great time to start getting your finances under control.
Caroline Siarkiewicz, Head of Debt Advice for the Money Advice Service has provided some top tips to help people who are struggling with large credit card debts to get their finances back on track. She says; “Credit card debts can be expensive and can gradually build up until you feel like you are struggling to manage. The good news is that there are plenty of ways that you can start to reduce these debts before they become a bigger problem.”
1) Keep track of your credit card debts – work out how much you owe and how much money you have available to make manageable repayments each month.
2) Pay off the debts with the highest interest rates first – Make sure you focus on paying off the most expensive credit card debts first, for example, if you owe £1,000 on a card charging 19% annual interest and another £1,000 on one charging 34% annual interest, concentrate on the card charging 34% interest first and pay as much as you can.
3) Consider consolidating your credit card debts – with low interest rates, you may get a better deal by consolidating your debts into one credit card. This will also make it easier to make manageable monthly repayments. You can shop around for the best deals using comparison websites.
4) Set up a direct debit – This will ensure you don’t miss any payments and help you avoid any late payment fees which could push you into further debt.
5) Get help with your debts - If you are finding that you are struggling with your debts, use the Debt Advice Locator Tool to find free, impartial advice in your area either over the phone or face to face.
For more information about repaying credit cards debt visit the Money Advice Service website.
Money management tips - advice from an unexpected financial adviser
When preparing to start a family, it’s common to seek advice from lots of sources – mainly friends, professionals or the internet. But for Lydia, 25, who is expecting her first child, the financial tips she swears by come from a person you may not expect – her 83 year old Grandma, Maureen.
Maureen and her husband, Jimmy, had their first child in September 1957. As newlyweds returning from their honeymoon, they had little more than half a crown to their names. Making the most of their finances was an absolute necessity and in turn made them thrifty savers.
Maureen shares her pearls of wisdom:
Shop around. For Maureen, everything was second hand or borrowed until they could buy their own, which they managed to do gradually. Bringing this into 2017, there are many comparison and second hand websites at your fingertips. Making sure you are shopping around for the best deal or a second hand bargain is a sure fire way not to waste money.
Know your numbers. Maureen managed her household money on a weekly basis. She knew exactly what was owed where. Nowadays you don’t have to do this all in your head. Instead register for a free-for-life credit report at Noddle.co.uk. A credit report is like a financial passport and includes your credit history and information on how well you manage the money you borrow. By knowing what’s in your report you can put the information to good use.
Can’t afford it? Don’t buy it. Maureen is a big advocate of spending within means and would have never splashed out on something for her children that she could not afford, instead making the most out of what she had. However, if there is something you need to purchase, but don’t have the funds, using a credit card sensibly can be useful and a great way to build your credit score.
Use cash. Maureen kept all of her leisure money in a jar, that way she knew exactly how much she had budgeted for the week. Similar to this, a good way of avoiding being contactless-payment-happy, is to take out the cash you have for the week and commit to not spending any more.