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 It is now over 6 months old so the content may be out of date.

Published: 11/10/2018

Credit cards can be incredibly useful when used wisely, but unfortunately, it's easy for debt to begin racking up, and for repayment struggles to follow. Happily, however, new data reveals that such difficulties are beginning to lessen, with a growing number of consumers able to repay their credit card debt.

Improving picture?

The figures, from Arrow Global, show that 51% of consumers don't settle their credit card balance in full every month, down from 55% in 2016. While this shows that just over half of people still struggle to repay their outstanding debt, the picture is slowly improving – and this is particularly the case among younger borrowers.

Among those who have failed to make debt repayments, 69% of 45-54 year olds and 68% of the 55+ age group have a credit card balance not settled in full every month, compared with just 22% of 18-24 year olds and 42% of 25-34 year olds. This "challenges the view that older generations are more adept at managing their money and that younger generations bury their heads in the sand when it comes to personal finances", said the report, with younger borrowers appearing more able to repay their debts effectively.

Worried that credit card struggles are impacting your credit score? Stay on top of it by checking your score for free, with Experian for instance

How to deal with credit card debt

The research found that poor budgeting was the top reason for borrowers' inability to clear their debts, with 32% citing it as the main barrier to making repayments, followed by reduced earnings (28%) and borrowing too much at the outset (22%). This seems to suggest that something as simple as budgeting effectively could be sufficient for many to begin clearing their credit card balances, but of course it isn't always that simple.

"It's clear from this research that many consumers persistently struggle with their debt obligations," said Lee Rochford, group chief executive officer of Arrow Global. "While some factors are clearly outside their control, such as redundancy and illness, this research shows that better budgetary management would stop some people from falling into unsustainable debt.

"If people do fall behind on their repayments, it's important that they don't bury their heads in the sand and that they proactively seek professional advice to get their finances on a more stable footing."

If you're struggling with debt, start the process by reading our guides on how to cope, and make sure to seek professional advice

Make credit cards work for you

One way to make credit cards work for you – by helping you consolidate your debts, and potentially become debt-free sooner – is to opt for a 0% balance transfer credit card. These deals allow you to transfer balances from other cards so you've just got one monthly payment to cope with, and better yet, you needn't worry about interest adding to the bill for the duration of the introductory term.

This can make a huge amount of difference to those struggling to repay their debt. Interest can make the whole thing even more difficult, and without it, you have the power to be debt-free far sooner, as your balance won't continue creeping up regardless.

Just make sure that you never spend on these cards as they often come with high purchase rates, and always aim to repay the balance in full before the introductory term ends and interest charges begin to apply. To do that, simply divide the balance by the length of the 0% term, and make sure to repay that amount back every month. Voila, you could be debt-free before you know it!


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