Quarter Of UK Credit Card Holders Having Payment Problems

A survey commissioned by the Debt Advisory Centre in November 2014 has found that almost 25% of credit card holders in the UK are finding it hard to make the minimum payments on their cards, or to pay anything at all. Carried out by OnePoll, the research involved 2,000 UK adults, including 636 Scottish residents.

Key findings included:

  • 19% of people surveyed could only make the minimum monthly payment on their cards in October 2014.
  • 5% couldn’t pay off anything at all their accounts at all.
  • Young people aged between 18 and 24 are having the most problems with credit card repayments.
  • Of this group, 26% could only make the minimum payment in October and 13% missed that month’s payment completely.
  • However, of everyone polled who has a credit card, 49% said they paid off their credit card balance in full in October.
  • A further 19% said they paid an amount in between the minimum payment and full balance.

Andy Gorton, Managing Director of leading debt advice firm, Bankruptcy Clinic, comments: ‘Whilst it’s encouraging to see many people making full monthly payments, or at least more than the minimum amount, some of these are a worry. People paying just the minimum amount off their credit cards often don’t realise how much interest they’ll end up paying, not to mention how long it will take to clear the debt. And those who can’t afford to make any payments at all are simply heading for trouble.’

Most credit card providers charge hefty fees for non or late payment, which will be added to the customer’s account along with interest on the full outstanding balance. Payment problems will also be noted on the customer’s credit file, which can make it harder to obtain further credit, in the future.

Miss a few payments and you’ll not only damage your credit rating, but you could also find your credit card debts spiralling out of control as fees and interest mount up,’ says Andy. ‘Things will only get worse if you ignore the issue, so if you can no longer manage your monthly payments, you need to take steps to get the debt under control as soon as possible.

Overwhelmed by debt? Bankruptcy Clinic can help.

Whether you owe money on credit and store cards, personal and payday loans, or bank overdrafts, Bankruptcy Clinic will help you find the best way to take back control of your finances. Our qualified advisers will discuss your circumstances in detail before explaining the debt management solutions that are available to you.

Depending on your situation, these could include:

  • Often seen as a last resort, declaring bankruptcy may actually be a good option if you don’t own your home or any other expensive assets, and you have little or no disposable income. Yes, there are disadvantages and restrictions that you’ll need to consider, but in most cases, bankruptcies are discharged after just 12 months – meaning you could walk away from most or all of your debts after a year.
  • Debt Management Plan (DMP). This is an informal plan that may suit you if you need to reduce your monthly outgoings, but can still pay something off your debts. Our expert partner firm, MoneySolve Ltd, will negotiate new monthly payment amounts with each of your creditors and manage everything on your behalf.
  • Individual Voluntary Arrangement (IVA). A form of insolvency that can be an alternative to bankruptcy if you’re willing to enter into a long term arrangement with your unsecured creditors. Typically, you’ll make a fixed, affordable monthly payment for 60 months, after which the remaining balance of your debts will be written off.
  • Debt Relief Order (DRO). A DRO might be for you if you have few or no assets, little or no disposable income and owe less than £15,000. You’ll need to meet other strict criteria, too, and comply with restrictions similar to those imposed by bankruptcy.
  • Scottish solutions. Through our Scottish partners, we also offer sequestration (the Scottish form of bankruptcy), Protected Trust Deeds (similar to IVAs) and other solutions to clients living in Scotland.

Weighing up the pros and cons

It’s important to remember that all debt management options have drawbacks as well as advantages. That’s why it’s so important to take expert advice from the qualified debt counsellors before deciding on the best way forward.

You can trust us to fully explain the pros and cons of each debt solution which might be open to you, as well as clearly explaining any fees that apply.

Contact Bankruptcy Clinic today

  • Call free from a landline on 0808 168 7389 or 01625 462 770 from a mobile
  • Complete our quick enquiry form and we’ll get back to you as soon as we can.

Andy Gorton is the author and editor of the Bankruptcy Clinic

Andy Gorton – who has written posts on Bankruptcy Clinic Blog.

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