People who live paycheck to paycheck can attest to challenging and tough situations since the pandemic hit. There was less money after staying at home which created a financial nightmare because it was hard to cater bills and other expenses. The reality sunk when the lockdowns and curfews were lifted, and people started to have a hard time meeting even their basic needs.
There was a survey done by The Money Charity in 2020 that showed that 8.9 million people were in debt as a result of the pandemic. It showed that the average credit card debt per household was 1,938 pounds as of May 2021. The good news is it is possible to write off debt in the UK.
Here are some tips that are going to help with credit card debt if you are one of those people who experienced financial challenges during the pandemic.
Assessing Your Situation
Before you go into a battle, you have to first know who you are facing. Make a plan that is going to highlight your defense and attack strategies before you head out. Take time to determine what you owe and to whom, and then come up with a plan for settling the debts. Your debts can be on different cards if you have more than one, which can make it a little bit challenging to get accurate details of the debt. Having a plan is going to help you remember the debt so it doesn’t sneak up on you.
This isn’t the time to feel ashamed or judge yourself harshly because of your financial situation. Maybe you are dealing with an emergency like an injury, illness, or job dismissal. There are times when it is all bad luck, like when your only mode of transport to and from work is written off in an accident. Maybe you are faced with unavoidable home repairs. This shows that you can find yourself in huge debt as you try to work through a tight budget. Having a bad month in the current times of high costs of living can have rippling effects and can leave you with a lot of debt that you can seem to get out of.
Increasing the monthly repayments
Let’s say you have figured out the exact credit card debt. In this case, you can choose to make the minimum payments over a long period with the average interest rate (this can be more than 18 years). You can reduce the period drastically to roughly 5-7 years or even less if you set aside a given monthly amount over the average minimum. This is going to help in offsetting your debt.
You can clear your credit card debt faster when you increase the monthly repayments. The amount you think is too little to make a difference is going to help you a lot become debt free.
Evaluating your credit score
If you have a less-than-desirable credit score, it becomes challenging to get the best rates on credit cards, loans, and other financial aid. It is a good idea to sign up with sites like Clearscore, Experian, and others with free subscriptions to give you advice and tips on improving your credit rating. Signing up for Experian can be great for your credit score because it improves it after payments like for your subscription.
Transferring to low-interest credit cards
You might be careful when it comes to your credit cards, but they can easily become an unaffordable sum if you aren’t careful with the high-interest rates. There was a 20.65% increase in the average representative rates in 2020. In 2019, the rate was 18.67%. When the number goes up, it affects your credit cards. You need to transfer to low-interest or zero-interest cards, which is going to dramatically lower your APR. This makes it easier for you to manage your debt.
Seeking Professional Advice
Never be frightened or ashamed by debt. Don’t let your financial situation overwhelm you. Acting ignorant is not going to help you with your debt, don’t lie to yourself. One of the best things you can do when you have problems with your debt is to speak to a professional.
Begin by talking to your credit card provider because some of them can be sympathetic and offer to help you by coming up with a good payment plan that works for you. This is a way to increase their odds of getting back what they loaned out. You can look for other options if this fails. Research and look for other options that can help you out.
There are many credit card debt management companies out there that can advise you. You can talk to a financial expert who is going to help you come up with a plan to make sure you come out of debt instead of making things worse. An experienced professional in this field is going to help you because they have the knowledge to help you out. It will be worth it in the end.