Could You Save Money by Clearing Your Credit Cards?

Brits have become known as a nation of credit card lovers, and a number of recent reports have revealed that many British borrowers have their purses or wallets filled with plastic cards, with some carrying three, four, even five credit cards on them at any one time. The UK's personal debt mountain reflects just how reliant the nation has become on finance such as credit cards over the years, and this is also reflected by the number of people that have found themselves buried up to the neck in credit card debt.

The one thing that you have to remember about credit cards is that the interest rates charged, and the various fees that are applied, can be very high, which is why it can take so long and be so expensive to pay off this sort of debt if you are making only small repayments on the cards each month. Many people may be planning to switch their expensive credit card debts to a low interest or interest free balance transfer credit card, but it is important to remember that switching cards has become increasingly difficult since the onset of the global credit crunch, which has resulted in tighter credit conditions.

This is the reason why some people that have a number of high interest credit cards that have outstanding balances could quickly find that they are paying a fortune each month on their credit card debts alone, which will not help if you are already struggling with your finances due to other rising costs, bills, and outgoings. It can be even worse if all you can afford to pay each month on your credit cards is the minimum repayment, because the vast majority of this will be swallowed up in interest which means that your balances will never really go down and you will be left paying the debts of for years, perhaps even decades.

If you have only one or two credit cards with balances on them then it is probably worth just trying to pay as much off as possible on each one until they are cleared. Try to make more than the minimum repayment otherwise you will be stuck with these debts. If, however, you have several high rate cards with outstanding balances and you cannot afford to pay off the balances other than through small monthly repayments or even minimum repayments then it may be worth looking at taking out a secured or unsecured loan at a low rate and paying the cards off.

You could find that by doing this you are able to reduce the amount that you are paying out each month by a significant amount, which could really help your finances if you are struggling. You can also avoid having to pay a high rate of interest to each card provider, eliminate the risk of missed and late payment charges, and enjoy the convenience of not having to deal with a range of debts and creditors.

Peter Kenny has been writing financial articles for 10 years and is a writer for The Thrifty Scot, please visit us at Credit Cards and Balance Transfer Credit Cards Visit Compare Credit Cards