Recent statistics produced by CreditAction.org show that there was £53 billion of credit card debt in February. The collective credit limit on UK cards is a rather alarming £158 billion; this equates to an average limit of £5,129 per person. Individuals struggling to clear debt can resolve their money problems in a fraction of the time via a series of interest-free credit card balance transfers.
Making the Minimum Monthly Repayment on Credit Card Debt
CreditAction.org believes that the average interest rate on credit card debt was 17.92% in April. Making the minimum monthly payment fails to clear debt quickly enough. For example, a consumer that owes £5,000 pays 2 per cent of his outstanding balance each month. He proceeds to pay £1,200 each year, yet only clears £304 because £896 of interest has accrued.
Clear Credit Card Debt each month
In April, the British Bankers Association (BBA) stated that 73.4 per cent of customers have interest-bearing balances. Credit card debt is one of the most inefficient ways of borrowing money. Consumers should seek to clear debt in full each month either from savings or through a debt consolidation loan.
Interest-Free Credit Card Balance Transfers
Individuals with a good credit rating should consider to get loans in a flash. The non-payment of interest helps clear debt faster. For example, the Virgin credit card offers customers the opportunity to avoid paying interest for up to 16 months, although there is a 2.98% handling fee. After the 16 months is up, it is then possible to perform a balance transfer to another card; repeat the process until the balance is cleared.
- Making just the minimum monthly payment on £5,000 of credit card debt at 17.92% APR would yield a total of £10,825 of interest for the banks. It would also take a staggering 47.5 years to fully pay off the balance;
- On the same terms, an interest-free balance transfer allows a consumer to eliminate credit card debt in-full in just 4 years and 2 months- in excess of 42 years sooner!
Always use an online comparison site, such as moneysupermarket.com or uSwitch.com, to trawl the market for the best interest-free credit card deals.
An interest-free balance transfer can help consumers to resolve money problems and clear credit card debt in a fraction of the time. Always take into account that there is often a handling fee for initiating the transfer so check the different rates charged by various providers before signing-up. These deals will not be available for those with adverse credit.