If you, like many others, simply pay the minimum payment on your credit cars each month, it could take you over 26 years to repay the debt.
According to figures released by The Money Charity time taken to repay the average debt on a credit card could be an eye watering 26 years and 9 months.
The Charity estimates that the average interest rate being charged is 19.87% and that on average each household owes £2,655 in credit card debt.
The minimum credit card payment is set by the FCA and must be at least the interest charged, any fees and charges plus 1% of the balance remaining (often with a flat minimum payment of £5) and many lenders use this to set their minimum payment each month.
On this basis, if you continue to make the minimum payment, you will be paying for that impulse purchase well after you have thrown it away. Therefore, you should consider, where possible, making additional payments each month to eat away at the balance. This could have a dramatic effect on the time taken to repay the debt, and consequently the interest charged.
If you are in the position where you are just making minimum payments each month you should consider taking advice, this could be from the card company, as they may have another solution with a smaller interest rate, a debt charity advisor or an insolvency practitioner who may be able to assist you with your budgeting or advise on your options.Remember if you take no action to address the payments being made it could take nearly 10,000 days to pay off that purchase you make on the credit card today, what will you be doing in February 2046? Share and Like: