Using a credit card to meet your expenses may prove to be beneficial if you repay the debt on time. It doesn’t only help you build your credit score, but it also helps you with reward points and cashback. You can use these points for future purchases or even pay towards the outstanding balances. However, if you do not handle your card responsible, debt can quickly add up. Accumulation of unwanted and unnecessary debts always disturb financial peace.
Representative Example If you borrow £20000 over 72 months, your representative APR will be 22.90% APR. Your monthly repayments will be £488.36 and the total amount repayable will be £35,161.92. Representative Example If you borrow £20000 over 72 months, your representative APR will be 22.90% APR. Your monthly repayments will be £488.36 and the total amount repayable will be £35,161.92. Representative Example: Loan Amount: £20950.00, Loan Term: 85 Months, Interest Rate: 23.00% PA Variable. Monthly Repayments: £537.44. Total Amount Repayable: £45,682.15. This example includes a Product Fee of £2,095.00 (10% of the loan amount) and a Lending Fee of £714.00 Representative Example: Loan Amount: £20950.00, Loan Term: 85 Months, Interest Rate: 23.00% PA Variable. Monthly Repayments: £537.44. Total Amount Repayable: £45,682.15. This example includes a Product Fee of £2,095.00 (10% of the loan amount) and a Lending Fee of £714.00 Representative example: If you borrow £3000 over 36 months at a Representative rate of 47.8% APR and an annual interest rate of 39.7%, you would pay 12 monthly installments of £143.84. The total charge for credit will be £2178.24 and the total amount payable will be £5178.24. Representative example: If you borrow £3000 over 36 months at a Representative rate of 47.8% APR and an annual interest rate of 39.7%, you would pay 12 monthly installments of £143.84. The total charge for credit will be £2178.24 and the total amount payable will be £5178.24.Maximise your options: Compare and apply for loans below with LoanTube
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Loan Amount
£4000 -
£20000
Norwich Trust
Loan Term
1 -
10 years
4.8/5
Representative APR
22.9%
Minimum Age
21 Years
4.8/5
Norwich Trust
Loan Amount
£4000 -
£20000
Loan Term
1 -
10 years
Representative APR
22.9%
Minimum Age
21 Years
Minimum Income
£2000 per month
Loan Amount
£5000 -
£100000
Evolution Money Loans
Loan Term
1 -
20 years
4.5/5
Representative APR
28.96%
Minimum Age
18 years
4.5/5
Evolution Money Loans
Loan Amount
£5000 -
£100000
Loan Term
1 -
20 years
Representative APR
28.96%
Minimum Age
18 years
Minimum Income
Not mentioned
Loan Amount
£1000 -
£10000
1Plus1 Guarantor Loans
Loan Term
1 -
5 years
4.4/5
Representative APR
47.80%
Minimum Age
18 years
4.4/5
1Plus1 Guarantor Loans
Loan Amount
£1000 -
£10000
Loan Term
1 -
5 years
Representative APR
47.80%
Minimum Age
18 years
Minimum Income
Not mentioned
Let us understand more about credit card debt and how you can pay off the debt fast.
What is credit card debt?
- In simple words, credit card debt refers to the unpaid balance that you carry from month to month. Credit card debt is a type of revolving debt that allows you to continue borrowing money using the card until you do not exhaust the assigned limit on it.
- A credit card is an unsecured personal loan but it works a bit differently than the latter. You can use the credit card as long as you are repaying the debt. Your account will not be closed once you pay off the debt. However, when you repay a personal loan, your loan account is closed automatically.
How much credit card debt is too much?
Having too much debt will wreak havoc on your finances. There is no specified limit as to what defines “too much of debt”. It varies from person to person and depends on a variety of factors. When your debt becomes unmanageable, you should understand that you are in the wrong place.
Here are 3 tell-tale signs, which show that you have more debt than you can manage.
1. Borrowing money to pay off debt
- If whatever you earn monthly is not sufficient to pay for your debts and you have considered taking help to pay them off – then you are in too much debt. If you find yourself in a similar situation, then its time to sit down and understand your finances. You will need to plan and budget so that you make optimum use of the money that you get every month. In general, if your debt-to-income ratio is greater than 40% that means you have accumulated way too much of debt.
- Learn more about debt-to-income ratio for a better financial future.
2. You’ve exhausted your savings
- You need to stop exhausting your savings pot. If you continue draining your savings to pay off the debt that you have accumulated then your finances are not planned. Draining your savings can have a major impact on your financial life in the future. Savings generally act as a safety net in times of emergencies. If you exhaust it to repay the debt, then where will you turn to when you need it for real?
- Learn more about how you can safeguard your savings.
3. You feel anxious talking about money
- Unpaid bills and a wayward financial life may lead to anxiety. It may disturb you mentally and eventually, you will be in stress all the time. If you find yourself occupied of wondering what and where it went all wrong with your finances, then its time to revisit your plan. Discuss your financial concerns with your loved ones and partners to find a way to sort this out.
How to pay off credit card debt?
- You are required to make minimum payments every month towards your credit card when you use it for your expenses. You can make this debt affordable if you repay the debt every month religiously. This also boosts your credit score.
- If you pay less than the total outstanding amount, you’ll be charged interest. The less you pay towards your balance, the more interest you’ll pay. This is because the credit card interest increases, which means interest will accrue on interest. The longer you’re going to pay off your debt, the more you’re going to owe than you spent.
Here are 4 ways to pay your credit card debt:
1. Set a budget
- Creating a monthly budget helps you in keeping a track of your money. Take charge of your money by setting up a monthly budget. Also, if you have more than one debt to repay, it will help you to prioritize your debts. A budget allows you to have a clear and defined look at your finances. Having a budget proves instrumental in managing accumulated debts.
- Learn more on how you can create an effective monthly budget.
2. Cut down on credit card expenses
- Spending money from a card isn’t financially damaging. Rather it has a lot of benefits. However, mishandling of the card may damage your finances. Cut down on credit card expenses if you cannot afford to make the repayments. Do not use the card for an amount that will jeopardize the way you handle money.
3. Use 0% APR credit cards
- 0% APR credit cards are a great financial tool as you will not be charged any interest for an introductory period. However, when the promotional offer ends, you will be charged regular interest rates on the credit card. You can use the balance transfer feature of a 0% APR credit card to repay the existing credit card debt.
- Learn how 0% APR credit cards work and whether it is a good deal.
4. Consolidation loan
- Debt consolidation loans can prove to be a huge financial relief if you have unmanageable debts. It is an unsecured personal loan that you can borrow to pay off all your debts. With this loan, you will be required to make a single repayment rather than making multiple repayments. If you manage to get a personal loan for consolidation at a lower interest rate than the combined interest rate of all the other debts that you have, then you can save money on interest.
- There are other associated benefits of using a debt consolidation loan for paying off the credit card debt. Read whether using a debt consolidation loan is a good way to clear off the debts?
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What happens if I don’t pay my credit card debt?
- When you don’t pay your credit card bill, you will have to pay late fees, additional interest rates will be charged to it. These things will damage your credit score. If you continue to miss repayments, then the creditor may take legal help to recover the money they owe to you. You may receive a County Court Judgement (CCJ) for missing the repayments and it will stay on your credit profile for quite some time. It may restrict you from borrowing in the future.
- Therefore, ensure that you borrow or use an amount from the credit card that you can repay easily without getting your finances into trouble.
