With the holiday season now over many of us will be looking to consolidate the debts that we have accumulated over the Christmas period.
Many of us will be looking to try and tackle our credit card debts this year, and analysis recently conducted by price comparison site MoneySupermarket.com has shown that we can save hundreds of pounds by moving our credit card balances to the latest 0% credit card deal.
If you can’t afford to pay off your credit card debt in one go, then moving your balance using a balance transfer credit card should be your first step.
For example, if you have £3,000 worth of debt on your credit card, you can move this balance to a 0% interest balance transfer card and pay off £125 per month for 24 months interest free.
If you don’t move your balance and you use an existing credit card which has a market average interest rate of around 18.40% APR, you will approximately pay back an extra £702 over the 24 month period if you stick to paying £125 a month.
You can clearly see from the above example that you can save hundreds of pounds in interest if you move your balances to an interest free credit card. You can compare all of the latest credit cards at price comparison websites such as MoneySupermarket.com.
Moving your balance to an interest free balance transfer credit card is only beneficial if you pay off the balance in full by the time the promotional period ends.
To make sure that you take advantage of the interest free period you should budget accordingly, so if you have £2500 worth of debt on your card and you have an interest free period of 24 months, then you know that you should pay back £105 of your credit card debt every month to ensure the interest free period doesn’t expire.
Another important aspect to remember if you decide to take advantage of a long term balance transfer credit card is that if you miss a payment you could lose out on the initial promotional deal. With this in mind, it’s a good idea to set up direct debit payments to ensure that you at least pay back the minimum repayment amount.
If you don’t feel like you could pay off your amount of credit card debt over the promotional period then a personal loan may be a better option for you. Again, you can use a price comparison site to see what loans deals are currently available.
Using a personal loan you may be able to fix your loan repayments over a longer period of time, meaning your monthly repayments may be less, but in total you will have to pay back a higher amount as there will be interest to pay.
If you feel like your debt has gotten out of control over the Christmas period then you should let your provider know, and you can speak to a dedicated debt advice service such as the CCCS (Credit Consumer Counselling Service) who will offer their help and guidance.