Cardholders should always try and pay more than the minimum

According to recent reports many credit card users in the UK continue to make the minimum repayment on their credit card balance each month, despite the knowledge that they will be charged huge amounts of interest on their card balance. By making the minimum repayment each month, not only will cardholders have to put up with extortionate sums of interest being applied to their accounts, but they will also have to be in debt for a long time, as these small repayments will go mostly towards repaying the balance, leaving the actual debt itself virtually untouched.

Concerns have been voiced by officials at the Consumer Credit Counselling Service, who think that many consumers that make only the minimum repayment on their card each month could soon find themselves facing unmanageable levels of debt, which could in turn result in consequences such as court action or having to opt for an IVA or other debt management route. Although recent reports have suggested that many consumers are responsible and sensible when it comes to repaying their credit card balances, there are also many that do continue to make minimum repayments and could be looking at long term debt and financial problems.

According to the Consumer Credit Counselling Service a credit card balance of just two thousand pounds could actually take in excess of twenty years to clear with just minimum repayments. This is because the majority of the repayment made each month will cover just the interest, and hardly any of it will go towards clearing any of the actual balance on the card. A spokesman from the CCCO said: "The main thing about people who have either store cards or credit cards is not just to pay the minimum amount back every month. That's the main thing that leads people into debt."

Tom Smith
19th July 2007