Reno Charlton, award-winning writer, shares her financial expertise as a contributing columnist for www.credit-card-comparison-online.co.uk and www.personal-loan-comparison-online.co.uk.
In the current financial climate many people are struggling to keep on top of debt repayment such as credit card repayments, and for many the only option is to make minimum repayments at times when the budget doesn't stretch far enough. However, whilst making minimum repayments is okay on the odd occasion when money is tight it is not something that should be done regularly, as otherwise you could be hit with high interest costs and repayment of the debt will take far longer.
However, some credit card firms, such as Barclaycard credit cards, have gone a step further in a bid to 'help consumers' by further reducing the minimum monthly repayment that is required. At first glance, it might seem that the credit card firms are doing cardholders a favour as a result of this measure, as it means a lower repayment each month. However, when you look into it more carefully you will see that the providers are not doing consumers any favours by further reducing the required minimum repayment.
For example, as a result of the reduction in the minimum monthly repayment that has been introduced by Barclaycard it could take cardholders a whopping ninety eight years to clear a relatively modest credit card debt of just five thousand pounds.
Research that was recently carried out showed that based on an APR of 15.1 percent it would already take a lengthy thirty one years to repay a debt of £5000 with Barclaycard based on the previous minimum repayment. However, with the new, lower repayment this period would more than triple to ninety eight years. Even worse, it would generate additional interest charges of over sixteen thousand pounds!
If you are struggling with credit card debt repayments then, no matter how tempting the credit card firms make it sound, avoid making regular minimum repayments, as in the long term this will cost you a fortune and you will burdened with the debt for the rest of your life. You may want to consider transferring the balance from your credit card onto a 0% balance transfer credit card instead, which will allow you to repay the debt over a period of, say, a year or fifteen months without being charged any interest, thus making it a little easier to make a dent in the debt.
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