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40% struggle to make it to payday

40% struggle to make it to payday

Category: Debt
07/02/2018

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 It is now over 6 months old so the content may be out of date.

Credit card debt is taking its toll, as 40% of Brits are struggling to make it to payday, with 31% of these saying it's because of credit card repayments. This is according to a report by the New Economics Foundation, which has called for the credit card sector to be subject to the same restrictions as payday loans.

Overall, data from the insolvency and restructuring trade body R3 shows that 41% of Brits worry about their levels of debt, with 50% of these people worried specifically about credit card debt. Given the high interest rates that some cards can charge, it's not hard to see how someone could get stuck paying off the interest on their card each month without touching the underlying debt.

Indeed, just 41% of those who have credit card debt outstanding at the end of the month are deemed financially resilient by the FCA, with the rest either classified as 'surviving' (36%) or 'in difficulty' (23%). This means that the majority of those in credit card debt could be just a wrong turn away from being in serious financial trouble.

While it's always better not to have any debt, once you do there are a few things that can help you get out of it a bit faster. For instance, you could consolidate all your debts onto a single balance transfer card with an interest-free period (the longest period currently available is 37 months) that gives you a little breathing space to hack away at your outstanding debts.

Note that the cards with the longest interest-free terms may also have the highest balance transfer fees, so you may be better off with a card that has a slightly shorter introductory term but also a lower (or no) fee. Also remember to cut up and cancel your other cards so you don't get tempted to spend on them, and to check your credit rating before you apply for any credit.

Alternatively, you may need to consider taking out a personal loan to consolidate all your debts into one place. Unsecured loans tend to have lower interest rates than regular credit cards, and they'll allow you to pay off overdraft debt and such as well as credit card debt. They also make it harder for you to keep spending. Just beware that you'll have to be able to make the same repayment every month for the term of the loan, so if you don't think you can manage that, you may have to look elsewhere for a solution.

Don't be afraid to talk to your lender if you're seriously struggling, and for more guidance on debt, read our guide on the subject or contact a debt charity such as Citizens Advice.

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.

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