Britain’s an expensive country to live in. Even worse, in the last 10 years, wages have fallen in real terms meaning that we’re working even harder for less money. It’s no wonder that seven out of ten UK adults have an average debt of £6,372, much of which is held on credit cards.
In this article, BestUnsecuredLoans looks at the best ways to cut down on the amount of money you owe on credit card debts including a look at whether a debt consolidation loan is a viable option for you.
Get a real picture of what you owe on your credit cards
The first step in cutting your credit card bills is to know how much you owe. That sounds simple enough but it’s not really a surprise that most people don’t know exactly how much they owe on their cards. That’s because it’s invisible and you can make lots of little purchases on your card without needing to carry the cash around. It’s so easy to lose track.
Log on to all your credit card accounts online now, make a note of how much you owe on each card, and add them all together. Then, check your bank statements to get an idea of how much money you’re repaying every month.
What are you using your credit cards to buy?
Then, start looking in detail at each credit card statement online to understand what you’re actually spending your money on. Look for patterns of expenditure and, with each one, ask yourself if this is something you really need to spend. Millions of Brits are charged every month on their credit cards for services they don’t need or use anymore – we just forget to cancel our agreement with the companies were paying.
Make a list of everything you can cut out completely and contact your providers to end their service with you. For others, look to see if there are ways you can cut down – for example, that coffee and bacon sandwich you pick up every morning before you go into work.
Are there cards with better rates available?
The average British man, woman, and child own 3 different credit cards – there are over 160 million in circulation in the UK. There are also hundreds of companies competing for your business out there and they’ll offer you a great deal to come over to them.
Look for cards with lower interest rates. Better still, transfer your balance to a 0% rate card – some credit card providers offer up to three years and they’ll charge no interest on the balance you brought over to them. MoneySavingExpert has a great guide on this – click here to read more.
Do a monthly budget
You’ve already looked at your credit card spending and found cuts you can make. It’s time to do that now with the rest of your family finances. Log into your online banking account and make a list of everything that you spend money on now every month.
In the way that many of us forget to cancel subscriptions on our credit cards, we also do that with direct debits and standing orders. Are you paying £40 for a gym membership and you’ve not been to the gym for months? Are you paying out £90 a month to Sky for the sports and the movies but you only watch one match a month and perhaps a couple of movies? By switching to Sky’s lowest tier, you could save £600 a year.
As with those unnecessary payments coming out from your credit cards, cancel anything you’re not using anymore and downgrade any services that you don’t really use that much.
Try to bring in extra cash to your household to use to pay down credit card debt
The internet has opened up many different opportunities to earn whether it’s freelancing, working for Deliveroo, being paid to write reviews and more. If you set aside the equivalent of an hour a day to finding work and you could bring in an extra £10 for that hour’s work, it quickly adds up. £10 a day is up to £310 extra month – £20 a day is an additional £7,300 a year.
If that’s not for you, why not approach your boss and ask for a much-deserved pay rise? It’s best to do that if you have a good relationship with your boss and if your employer has been doing well lately. If sales have been flatlining, it’s probably best to leave your request for a few weeks.
Hide your cards
If you can, leave your cards at home. Did you know that people are more wary about spending cash than they are using their credit card? Lots of different scientific and behavioural studies have proven that we’re a lot more free-spending with a card in our pocket rather than notes and coins.
Dun &Bradstreet, when examining McDonalds’ till receipts, found out that customers spent up to 18% more on a card than they did with cash.
Keep track of your progress month by month and pay more than the minimum amount
Unless your credit card debt is very low or you come into an unexpected windfall, then your mission to pay your credit cards down may take a few months of belt-tightening. Set yourself targets for what you spend each month and try to stick rigorously to them. We all slip up from time to time but as long as the direction of travel is right, then well done.
Each month, with the additional money you’ve saved or made, pay down your credit cards by more than the minimum monthly amount and watch how quickly your balances come down.
What about a debt consolidation loan?
People take out debt consolidation loans to pay off other types of more expensive debts. If you do it right:
- you can pay off the money you owe faster,
- at the same time, you pay a lot less interest in doing so, and
- your monthly repayments go down meaning that you have more disposable income to play with
That’s because more debt consolidation loans have lower interest rates than credit cards, bank overdrafts, and other forms of debt you’re paying back.
If you take out a debt consolidation loan, please don’t resist the temptation to not pay all your other debts down. Yes, you’ll have a short-term cash boost and your bank balance will look very good but the amount you pay each month servicing those debts will be a lot higher.
Find the best debt consolidation loan with BestUnsecuredLoans
Here at BestUnsecuredLoans, we’re expert brokers and our job is to link borrowers looking for debt consolidation loans with the lenders happy to work with you.
The process is quick, simple, and easy. Once we have your details, we’ll send them and a copy of your credit file across to our panel of lenders. Within a minute or two, we should start receiving the offer back from our lenders. We then compare them on your behalf and we present you with the very best deal we’ve found with the lowest interest rate.
And, yes, we can work with most borrowers who have less than perfect credit histories so please don’t let that put you off from applying if that’s worrying you.
To start your application, please click here.