Credit card holders should overpay, says expert - Credit cards - News - Moneyfacts


Credit card holders should overpay, says expert

Credit card holders should overpay, says expert

Category: Credit cards

Updated: 07/01/2009
First Published: 06/01/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Credit card customers have been urged to consider overpaying in order to reduce their debt level.

Defaqto has noted that as interest rates have fallen, consumers may benefit from taking advantage of the opportunity to clear balances.

Principal consultant for banking at the firm David Black remarked: "With lower interest rates your monthly payments may reduce, but by overpaying the minimum amount required each month you will begin to reduce your debt more quickly."

He also suggested that mortgage customers do the same, but only in the event that early repayment penalties would not be charged.

Defaqto also advised consumers not to view cancelling of insurance for unsecured loans as a means to save money, as this could be needed in the event of a loss of income.

Sainsbury's Bank recently urged shoppers to use a reward credit card for small purchases, but to ensure that balances are paid off each month to avoid interest charges.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

It’s looking to be a credit Christmas

We are now less than 70 days away from Christmas, and with 70% of people admitting they haven’t started saving yet, millions will be needing to play catch-up - and plenty planning to turn to credit for some Christmas spending relief.

Can no credit score be as damaging as a bad one?

Debt is becoming an increasing problem, which is why those who have no credit commitments often feel pretty smug about it. However, while not relying on credit is admirable, having no credit score can actually be just as damaging as having a bad one.

Know your credit score – key to better borrowing

We all know how important it is to be credit savvy. It’s the only way to make credit work, which is why it’s so concerning that so few people know their credit score – and some don’t even know how much they’re borrowing.