Credit card debt


Credit card debt is by far one of the easiest debts to acquire but can also be one of the most difficult to get under control. There are lots of credit card types available and it is useful to know the differences between them, so you can be aware of the good points and bad points before slipping into credit card debt.

Credit cards are a form of borrowing and therefore must be applied for. They are issued by banks or other large financial institutions. Credit cards have spending limits and monthly repayments are expected. Interest rate is charged on credit card debt and the rates can be very high and unless you pay off your balance completely each month, you will be charged interest on a monthly basis.

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What is credit card debt?


There are 3 main levels of credit card debt:

  1. If there is still an unpaid balance remaining after making a payment then there is still a 'debt' that is owed to the credit card company. The credit card interest is charged on this unpaid balance. This is why to make credit cards work the aim should always be to pay off the balance in full each month.
  2. If you can only afford to pay the minimum payment every month then you are considered to be ‘in debt’ to the credit card company. By paying off the minimum balance only every month you are only paying off part of the interest and very little of the balance. At this level of debt, even if the card is cut up and there is no further spending on it, it is likely to be a long time and cost a significant amount of interest before the debt is paid off.
  3. The final level of debt is to have such as significant balance owing that the minimum payment on this each month is not affordable. At this level of debt with a credit company, it is important that action is being taken, such as discussing a debt management plan.

Annual percentage rate (APR)


All credit card companies have to quote an APR. This will help you to compare products with each other. It takes into account the total cost of borrowing, Such as:

  • Amount of interest that you will pay
  • Any additional charges
  • How often you must pay the interest

However this does not include charges you may receive for missing monthly payments .The interest rate of a credit card should be clearly displayed on any application form and promotional leaflet, so make sure you know how much you'll be charged if you're not going to pay your balance off in full.

Late credit card payments and your credit rating


If you are late making credit card debt repayments, it will have a negative effect on your credit rating. Your credit profile makes a record of every late payment you make; this will help lenders to decide how reliable you are for making repayments. If this does have a negative effect on your credit rating then if you want to apply for a mortgage, loan or credit card in the future, you might have to pay an extra high interest rate on what you borrow or in some circumstance may even be declined. This can be one of the knock on effects of badly managed credit card debt.

However, it is worth knowing that there is no such thing as a 'credit blacklist', and there are ways for somebody with a low credit rating to improve their score.

How to elimate credit card debt

The first step towards eliminating credit card debt is to take control of the situation. The sooner you do this the sooner you can start working on a viable repayment plan and stop incurring interest charges and late payment fees. Although it may seem like a daunting task there are debt management companies that can help you.

The first step should be to cut up the existing card so that no more purchases can be made.

If your credit rating is good enough, switching to another credit card that is offering 0% interest on balance transfers is a great way of eliminating any extra interest for a few more months.

Often, credit card debt can become very difficult to pay back, as it forms part of a wider debt problem, i.e. you could also have problems with payday loans, household bills, unsecured loans & overdrafts, storecards, debt collectors. If this is the case, then you need to think about taking out a debt management plan to help you deal with the all of your debt. Click here to find out how a debt management plan can work for you

Can I freeze interest on my credit card debt


Debt Reverse has a strong working relationship with virtually all of the UKs leading credit card companies. Because of this relationship and the number of debt management plans that we have with them we are often able to freeze interest and stop charges on our customers’ debts. This means that all of your monthly payments will go towards paying off your balance.

What credit card companies do Debt Reverse deal with?


We currently help customers who have got debt with credit card companies.

We have debt management cases with major companies including Barclaycard, Capital One, MBNA Europe, Lloyds TSB, Vanquis, Natwest, HSBC, Egg, Mint, Marbles and many more.