The UK is slowly becoming a hotpot stew of boiling debt. Here and there, households are flailing about, borrowing over an estimate of £210 billion currently. An excellent bailiff in Manchester and other financial experts can tell that the main culprit to this phenomenon is credit cards.
Research shows that one in three people drowning in severe debt cases have been lured in with credit card interest rates of 30 percent and over. Furthermore, experts also identify that car loans, overdrafts, and essentially collective unsecured consumer credit have sent households across the UK spiraling into these traps.
The Bank of England’s figures show that debt in the UK has grown by 10% over the end of last year, which is reported to be the highest figure since 2008. All this is alarming, at the very least, but there are ways to avoid the shackles of debt.
Re-evaluate your spending
The first step to managing debt is through re-evaluating expenditures. Be aware of your cash, where it flows into, and how much of it remains. Be reflective of where you currently are. If you are bordering on drowning in debt, step back and change the plan. Persistent debt is the kind where low- to middle-income earners are most vulnerable. Here, debt is never-ending. For instance, credit cards are used to pay for necessities, so the cycle remains. The golden rule of loaning? Don’t fall into the traps of debt when the amount of time it takes to utilize it is less than the time it takes for you to pay it back.
Pay more than the minimum credit due
When the bills come in the post, it will be tempting to focus on the minimum amount due instead of paying more. This is always the worst idea, in all honesty, as paying only the lowest amount will result in more interest in the long term. Remember that the minimum is merely a percentage of the total amount due, and not the actual amount. The amount that you choose to pay will lower the balance, yes, but it will take longer to clear. This is what experts refer to as the minimum debt trap, so it’s best to avoid it. Pay more than the minimum at all times.
Bring in extra pounds
Already trapped in boiling debt? If you find that your current income cannot cover your debts anymore, look for other ways to earn cash. Extra cash could come in from selling unwanted belongings or perhaps taking on extra working hours. You may also look for ways to save more of your income, such as opting to walk instead of taking the car. Cashback applications and websites are also worth looking into. Moreover, stick to the traditional way of saving up: piggy banks. Every penny adds up.
Think: what are you signing up for?
Have you been offered another credit card? Considering activating just one more? Debt experts suggest that before taking out a credit card, know what you’re signing up for. Are you currently able to manage your balances, paying off amounts full each month? Or are you beginning to drown in rates of interest? If it’s the latter, rethink activating that second credit card. One more tip: always refuse automatic credit limit increases. By doing so, you can keep total control over the credit limit.
Unfortunately, this crisis will remain persistent. There are many factors at play, of course, one of them being that the economy fluctuates, consumerism is at its peak, and the overall cost of necessities continue to break banks. There are ways to end the cycle, thankfully. Being a smarter consumer is one of them.