How can Leicestershire residents avoid getting into debt with their credit cards?
New government figures have revealed that the average person has suffered a £1,200 pay cut since the election, with wage freezes and the high rate of inflation to blame.
In a further blow to cash-strapped Brits, research from Bacs shows that household bills have leapt by 40% over the last five years.
Unsurprisingly, the combination has left millions of people struggling to cover essential monthly expenditure, with 25% saying they are unable to make ends meet.
As a result, almost one in five people have resorted to paying at least one household bill a month with a credit card – and a staggering 71% of those with a credit card or loan said they had been in debt for the whole of the past five years.
Credit cards may seem like a good way to plug a gap in your finances if you can’t stretch your funds out until payday, but paying with plastic can often lead to spending getting out of control – sometimes beyond repair.
With these statistics in mind, how can people living in Leicestershire make sure their credit cards do not get them into debt?
Read the small print
When asked if they knew what rate of interest they were paying on their credit card or loan debts, just 31% of people said they were fully aware of the precise figure. Familiarising yourself with the ins and outs of your card will significantly reduce the risk of nasty surprises at the end of the month. Alternatively, shop around to find a new card with a lower long-term rate.
Pay it off each month
This is the most effective way to prevent interest stacking up and getting into debt. If this isn’t possible, make a note of your credit card spending habits to find out where you spend the most. You can then work on cutting out unnecessary purchases and cutting back on certain things.
Compare the market
The survey highlighted household bills as a major problem, and one of the reasons so many people are paying with their plastic. Spending a small amount of time comparing the credit card market can have a huge impact on the amount you spend on bills, and could make the difference between being in the black and wallowing in the red.
If debt is unavoidable
Individuals who are in debt and struggling to stay on top of monthly repayments may wish to consider debt management. This allows you to take control of your debts, and clear your outstanding balance with a monthly payment system based on what you can afford.