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Take Control of Your Debit and Credit Card Debts and Get Back in the Black

Personal_Finance / Debt & Loans Nov 24, 2015 - 03:31 PM GMT

By: MoneyFacts

Personal_Finance

Consumers who are hoping to snap up a great deal in the upcoming Black Friday sales need to make sure they don’t lose their heads when its comes to their finances, warns Moneyfacts.co.uk.

Millions of shoppers are expected to take advantage of offers both in shops and online this Friday (27 November), but the cost of using an overdraft or a credit card to bag some goodies could kill the buzz of the bargain hunting.


While interest-free credit cards and fee-free buffers on overdrafts certainly exist, the majority of credit cards, store cards and high street bank accounts do in fact have high charges borrowers would be wise to avoid (see table below).

Rachel Springall, Finance Expert at Moneyfacts.co.uk, said:

“While it’s tempting for shoppers to go on a wild spending spree, they would be wise to take a moment to consider the actual cost of using their credit card or overdraft, particularly if they know they won’t have sufficient income to get back in credit in the short term.

“It’s so easy to borrow money using an overdraft or credit card, and contactless payments are making this process even quicker. However, buyers need to be careful not to overspend as they could end up being hit with costly charges.  

“Some banks have moved away from charging interest on their overdrafts and have instead turned to daily charges. While this does give customers greater transparency, it also means that many are now paying more. Some banks charge customers £1 a day to borrow from a planned overdraft and up to £5 daily for exceeding the limit. So if £300 is borrowed for half a month, this could end up costing borrowers an extra £75 in charges.

“Store cards are a convenient method of payment, but they can charge up to 29.9% APR on purchases. As a result, they should only ever be used for the upfront signing-up perks because better cards can be found elsewhere.

“If borrowing can’t be avoided, there are simple ways to reduce costs. For example, by using a competitive money transfer credit card, customers can redit their bank account to save them the pain of excessive overdraft fees. Customers can also use an interest-free balance transfer card to avoid credit card charges and gain a bit of breathing space to pay off outstanding balances. Some of these deals have no fee to move debts, which will also help to keep costs down.

“To control debt, consumers must digest the importance of paying more than the minimum monthly repayment on credit cards, or they could become embroiled in a vicious cycle of debt. Tackling the problem early is the best way to get back in the black as the longer the debt remains, the harder it is to pay off.”

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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