Credit Card Debt Help

Credit cards are a simple way to borrow money for bigger purchases. But they can cause issues if you aren’t careful in how you use them. If you can’t pay back what you owe in full, banks can charge you interest that can quickly add up.

What are credit cards?

If you’re approved, banks will give you a credit card with a spending limit. This is the amount of money you’re allowed to borrow on the card. If you spend more than this limit, you’ll often face extra charges.

When you use the card, the bank pays for your items first. Then, the bank sends you a bill every month so you can pay them back. You can choose to pay back all the money at once, or just a small part of it. If you pay it all back straight away, you’ll likely not have to pay any extra fees or interest.

If you only pay back a small part of your bill, the bank charges you a fee for borrowing their money. This fee is called interest. Interest is added to the money you already owe, so your debt will increase. If you miss a payment, your bank may add late fees.

What are the different types of credit cards?

Credit cards

Standard credit cards are the most common type. They’re issued by banks, and you have to apply either online or in-branch to get one.

Debit cards

Debit cards are different to credit cards in the sense that you can only draw out money you’ve already got in your account, rather than borrowing. If you try to withdraw money you don’t have, your card may be declined, or you might go into your overdraft.

Store cards

Store cards allow you to buy items on credit from a retailer, and work similarly to credit cards. Anything you spend on your store card might begin to charge interest if you don’t pay it back within a certain timeframe.

What happens if I don’t pay my credit card debt?

If you don’t pay your credit card debts, then your credit card company will take steps against you to recover the money you owe.

At first, your card provider will contact you by phone or by letter about your credit card debt. They may do this multiple times over the coming weeks and even months. You’ll need to make at least the minimum payment on your credit card debt to avoid them taking any further action.

If you don’t pay your provider, your account will default and your card may be cancelled. You’ll be asked to pay what you owe again.

Further non-payment of credit card debt after your card has been cancelled may lead to you being contacted by a debt collection agency.

How does a credit card debt affect my credit score?

Credit cards can be both good and bad for your credit score.

If you pay your balance in full and on time each month, having a credit card will improve your credit score. This is because making repayments on time shows that you’re a responsible borrower and aren’t likely to have any problems repaying what you owe.

However, if you fall into credit card debt with more than one lender, or use your card irresponsibly, you may find that your credit score could be negatively affected. Credit card providers give the following information to credit score companies:

• How much you’ve spent on your card each month
• What your credit limit is on your card
• How much money you’ve drawn out from a machine on your card each month

If credit score companies receive negative information about your spending habits, then your credit score will become lower as a result. Your score will also improve if you’re more responsible with your spending and keep up with repayments.

What do I do if I can’t afford the minimum payment on my credit card?

If you’re struggling to make the minimum payment on your credit card, don’t panic.

The first thing you should do is contact your credit card provider and explain your situation. They may agree to a more affordable repayment plan or at least reduce your credit card’s minimum payment.

If you’re struggling with multiple credit card debts, then you might want to consider seeking professional help. Get in touch with our advisors today online.

Can credit card debt be written off?

Sometimes, you can clear some or all your debt using a debt solution. There are multiple debt solutions that can allow you to write credit card debt off, including Individual Voluntary Arrangements (IVAs), Debt Relief Orders (DROs) and Bankruptcy.

Each option is different, so it’s important to consider all your choices. If you’re not sure which debt solution would be best for you, then please call our helpline team on 0800 316 1833 for free, no-obligation advice from one of our friendly debt advisors.

Can I consolidate credit card debt?

Yes, you can consolidate your credit card debt. Here are two main ways to do it.

• New loans: You can get a new loan to pay off all your cards, known as a consolidation loan. Then you only have one payment to make. You should check that the interest on the new loan is lower than your old cards to avoid increasing your debt.
• Moving the balance: You can move the money you owe to a new credit card, known as a balance transfer card. Some cards charge less interest for a short time to allow you to repay your debts. You must check when this short time ends so you don’t pay more if you cannot pay in full before the terms change.

Alternatives to credit card debt consolidation

Consolidating credit card debt isn’t the only option if you’re struggling with multiple credit card debts.

Debt solutions, such as a Debt Management Plan (DMP) can allow you to pay off what you owe in a more manageable, affordable manner with a structured plan.

Paying off credit card debt

There are a few steps you can take to help pay off your credit cards.

• Look at your money: See what comes in and what goes out each month. Find out how much you owe on each card. This helps you build a clear plan.
• Change how you spend: Try to buy only what you need. You can use any spare money to pay off your cards faster.
• Make a budget: Write down a budget and stick to it. This ensures you have enough money for the essentials first.

What if I’m struggling to make repayments on my own?

If you find it hard to manage your payments, it’s best to speak to a debt advisor as soon as possible. Extra fees can grow if you miss payments. Get free, confidential advice online or call 0800 316 1833 to speak to one of our experts. We’re here to help you understand your options and find a practical solution.