Credit Card Debt Help

Yes, credit card debt directly affects your credit score and whether you will be approved for future loans, credit cards and a mortgage. As your credit card balance or missed payments fluctuate, so will your credit score.

If you cannot pay your credit card’s minimum repayment, your account will go into arrears. Your creditor will contact you to request the missed payments, but if you’re still unable to pay, you will be issued with a default notice.

This process usually takes around 3-6 months. If a default is applied to your account, this will remain on your credit file for 6 years.

As a final step, the creditor might take further action, for example, passing your debt on to a debt collection agency or even considering legal action to recover the debt.

You can approach lenders directly, or use the comparison websites available online such as:

• Money.co.uk
• Moneysupermarket.com
• Compare The Market
• Uswitch

Credit card companies can suspend your card if you consistently fail to make payments, or, if you have paid more interest, fees and charges than you’ve paid off the balance for 3 years.

However, credit card companies must also show forbearance and could freeze or waive interest and charges. They must also give you plenty of warnings and try and remedy the issue before reaching the card suspension stage.

Credit card debt can feel overwhelming, especially when interest is added.

The first thing to do is stop spending on your credit card; it can even be worth cutting your card up to avoid temptation. After all, the debt will be harder to pay off if the amount you owe is rising.

Secondly, get a clear idea of your finances and work out what you can afford to pay off your credit card each month. Although paying off the minimum amount is a great starting point, this can mean you don’t pay off much more than your interest. Therefore, if you can allocate a bit more to paying off your bill each month, you will pay off your debts quicker.

A balance transfer credit card will allow you to take debt from one or more credit cards that you’re paying interest on and move it to another. This new card would offer 0% interest for a set time: usually ranging from 6 – 36 months. This can be a good option if you have the funds to pay off enough each month to clear the debt before the end of the interest period. However, if you are only making minimum payments then balance transfers can sadly prove a little futile. If you do opt for a balance transfer, do not spend on the new card as this will only generate more debt to pay off.

To find out more about balance transfers and how they can help with credit card debt, read our blog.

In some cases, yes. You might qualify for a formal debt solution that may be able to write your credit card debt off, but this will affect your credit file for six years.

 

If you live in England, Wales or Northern Ireland, debt solutions that may be able to write off some, or all, of your credit card debt include:

• Individual Voluntary Arrangements (IVAs)
• Debt Relief Orders (DROs)
• Bankruptcy

If you live in Scotland, you may qualify for Sequestration, a Protected Trust Deed or Minimal Assets Process (MAP) Bankruptcy.

Yes. At Angel Advance, if you enter into a Debt Management Plan with us, we will contact your creditors on your behalf. This includes negotiating lower repayments and asking creditors to freeze interest and charges on your non-priority debts such as credit cards, unsecured loans and overdrafts. We would also handle all creditor contact for you.

Credit card interest is the cost of borrowing money when you carry a balance from month to month or take out a cash advance.

Interest is usually calculated daily and added to your account monthly. If you can only afford to make the minimum payment towards your credit card debt each month, interest can add up quickly and it may take longer to pay back your balance. But if you pay it off in full each month, a grace period usually means you can avoid interest charges. However, interest may still apply to cash advances or if you do not manage to pay the full balance.

Yes. There are five main types of credit card interest, calculated as an Annual Percentage Rate (APR), which tells you how much interest you’ll pay over a year if you cannot pay off your full balance. 

Common types of credit card interest in the UK include:

• Purchase APR: The interest rate you pay on new purchases you make with your card, which depends on the credit card product itself and your creditworthiness. If you pay your statement balance in full and on time each month, you can usually avoid interest on purchases.
  

• Balance Transfer APR: Often the same as purchase APR and only applies to balances you transfer from other credit cards. There is usually no grace period for balance transfer cards and your rate depends on how well you pay off your credit. It’s important to note that any payments made over the minimum amount due are often applied to the balance with the highest APR (or interest rate) first.
  

• Cash Advance APR: This is usually a set rate, which only kicks in if you request a cash advance (allows you to withdraw money using your credit card) on your account. This can be 10-15% higher than the purchase APR and with balance transfers, cash advances do not give you an interest-free grace period.
  

• Introductory or promotional APR: Many credit card products offer a low, or sometimes 0% APR, interest rate for purchases, balance transfers or both. But these offers usually only last a limited time, and once this period is over, the type of APR linked to your card will go back to the standard rate set out in the agreement.
  

• Money transfer APR: Some credit cards let you transfer money from your card to your bank account. These transactions may have their own interest rate and fee.
  

If you miss payments, you may be charged a late fee, lose promotional rates and damage your credit record. Some lenders may also increase your rate if your agreement allows it.