Credit Card Debt

It’s easy to understand why people get into credit card debt. Making payments with plastic cards is quick, simple, and often more convenient than cash, however all credit cards have rules and limits, and the customer will have to pay if they don’t use the card properly or sensibly. Unfortunately credit card debt soon racks up if you don’t manage it well.

We're here to help

Simply fill in the form below and one of our friendly advisers will call you back

Types of credit cards

There are lots of 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 have to be applied for, as they are a form of borrowing. They are issued by banks or other large companies. Credit cards have spending limits and expect monthly repayments. Interest is charged on credit card debt, and the interest rates can be high. Unless you pay off your balance completely each month, you will be charged interest on a monthly basis. Using a credit card for withdrawing cash (called a ‘cash advance’) is different to making a payment on your credit card.

    If you do this you may be charged a fee plus a higher interest rate, which could start adding up straight away. Use cash withdrawals sparingly, as credit card debt can increase quickly if you use your card this way.

  • Debit cards are issued by your bank and link to your bank account. When you use your card, the money is taken straight out of your account and there is normally no charge for spending or withdrawing cash. Most debit cards can also be used as a cheque guarantee card.If you don’t have enough money in your account or an arranged overdraft to cover a card payment, your card may be declined or your bank may charge you a high fee.

  • Store cards work in a similar way to credit cards. They are a form of borrowing and have to be applied for. Store cards are issued by retailers and you can normally only use them for shopping in their own outlets. A lot of store cards will have introductory offers that sound like a good deal, but there may be a high interest rate once the introductory period is over.

    The interest rates for store cards can be a lot higher than credit cards, which can make this an even worse form of credit card debt.

How credit card debt works?

Credit cards charge interest for any money borrowed, and high borrowing will mean high interest and charges; and of course credit card debt becomes higher too. The credit card provider will expect a minimum repayment each month, but this amount can be quite low.

If a customer only pays back this small amount each month, interest charges will build up over time and the bill could take a long time to clear. As well as getting high interest charges for a big credit card debt, somebody with financial difficulties could also face additional fees for late payments or overspending. Interest charges, repayments and fees can add up quickly to create a credit card debt problem.

Late credit card payments and your credit rating

If you are late making credit card debt repayments, it will usually have a negative effect on your credit rating. Your credit profile makes a record of every late payment you make, and lenders will look at this to decide how reliable you are for making repayments.

If you have a low credit rating and 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 you 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.

If you’re struggling with credit card debt

Credit card debts can be frightening and it’s tempting to try and ignore them, but it’s much better if you deal with it sooner. Any debt situation can be addressed, and PayPlan will be able to advise or help you.

Call us now for immediate and confidential free debt advice on 0800 280 2816 or use our Debt Help Form, and your debt help can begin as soon as you contact us.

How can I pay off credit card debt?

A quick way to pay off your credit card debt is to gradually increase your repayments over a period of time. However, If you are in debt on your credit card and struggling to pay your monthly repayments call us now for immediate and confidential free debt advice. You should avoid taking out pay day loans or transferring your balance to another credit card as this can increase your debt levels due to the high APR and interest rates.

Get advice now

I can’t pay over-limit charge on credit card

If you have gone over your credit limit and cannot pay the over limit charge you will get a small charge by your card issuer. However don’t panic. Call PayPlan for some free and impartial advice and we can help you.

Credit Card debt consolidation

Merging multiple credit cards payments in to one monthly repayment is known as credit card consolidation. If you are looking to clear a debt on a credit card,  a debt consolidation loan may make your monthly repayments more manageable. As long as you maintain your repayments, debt consolidation loans can help you by consolidating your repayments in to one monthly payment, reduce the interest you pay, and potentially increase your credit rating.

If you would like more advice on credit card debts contact PayPlan on  0800 280 2816 or use our Debt Help Form. Our advice is free and impartial.

Negotiating your credit card debt

Missed payments on a credit card quickly build into credit card debt. To keep your credit card debts down and avoid high monthly repayments, you could contact your creditor and negotiate your debt with them to find a repayment term that suits. However If you’re worried about your debts escalating and afraid to contact your creditors don’t worry, PayPlan can help. Simply call us free on 0800 280 2816 to discuss what options are available to you. Alternatively contact us via our debt help form.

Can’t pay credit card debt

If you are struggling to pay your credit card this month or have existing debts you cannot pay, you could contact your creditor to discuss your options. You could ask for interest to be frozen so that the debt is manageable and doesn’t increase.

If you would like further advice regarding card debt or would like free debt advice from PayPlan please contact us on 0800 280 2816

Get advice now