How to manage your credit card debt
Staying on top of any kind of debt takes effort, but credit card debt can be especially tricky unless you’re careful.
On the one hand, repay your balance in full every month and you’ll never pay any interest on your card. On the other hand, if there is a balance remaining on your card at the end of the month, you could end up paying a lot of interest. For that reason, it’s important to keep on top of your credit card debts every month.
Managing credit card repayments
As mentioned, it’s always best to repay what you owe in full every month, so you avoid being charged interest. In this sense, a credit card can be interest-free in the short term.
Of course, you don’t have to repay your balance in full every month. Some people consider paying interest worthwhile if it means being able to spread their repayments out over a number of months. And in truth, the amount of interest you’ll pay over a few months probably won’t be that high unless you owe a lot of money.
The most important thing is having a solid plan in place for repaying your debts. For example, you might have a £500 debt that you decide to repay over 6 months: on a credit card with a typical 17% APR, this would cost you £87.50 a month (£83.33 a month plus interest). Without planning, it can be hard to stay disciplined with your payments, and you might end up taking much longer than necessary to repay what you owe (and paying lots of interest as a result).
What if I can’t afford my credit card repayments?
If you find that you can’t afford your repayments because they’ve become too expensive, or because your other commitments cost too much, it’s important that you get help as soon as you can. Debt solutions such as an IVA (Individual Voluntary Arrangement) or a debt management plan could make a big difference, depending on your circumstances, if you can reach an agreement with your creditors.
However, remember that these solutions are not an easy way out of debt and should only be considered by people who are genuinely struggling. Debt solutions that involve paying less than you originally agreed towards your debts will harm your credit rating – and can cost you more in the long run – so only go ahead if you’re certain it’s the right option.