Credit Card Debt The recession has forced millions of people into debt and, according to a recent report from the BBC "UK credit card companies wrote off £3.64bn in bad debts on their customers' cards in 2011". This just shows how many people are struggling with credit card debt and seeking help. High interest rates The current average for credit cards interest rates is at 17.3%, this is the highest since 2001*.Banks have become much more choosy about who they are lending to, and those seen to be a higher risk borrower are offered interest rates as high as 30%. Paying the minimum can increase your debt If you have a credit card or many of them, and are paying only the minimum amount per month and finding it a struggle, you should seek help to try and regain some control over your credit card debt. Our helpful advisors will be able talk you through all the debt solutions we can offer. What is credit card debt? Credit cards are one of the quickest and easiest ways to borrow money, so it's not surprising that so many people get into debt with them. It can be one of the most difficult debts to get under control, largely because unlike a loan, there is no fixed rate of borrowing or arranged monthly payment. Credit card companies allow you to pay the minimum amount per month and then can sting you with high interest rates and charges, allowing the debt to mount up and soon become out of control. Credit card convenience Paying with plastic has benefits when you're paying for something that's a large sum of money like for example, a holiday. It allows you to pay when you don't have the money to hand, and then pay the credit card off on a monthly basis. Paying on a credit card also usually offers more purchase protection than paying in cash. This is where people can get into large amounts of debt. Ideally you should pay off the full amount at the end of the month but this often isn't the case, and people will end up paying the minimum amount each month which is often barely enough to cover the interest. At this point the credit card is something that is going to take an awful long time to pay off and can become a huge burden. The idea of only having to pay the minimum amount each month may sound ideal, but the credit card companies can lock you into a false sense of security and ensuring that you stay in debt and paying interest to them for a very long time. How a credit card works When you are accepted for a credit card, you will be given a credit limit. Usually this limit can be increased or decreased fairly easily by speaking to the creditor. Credit card companies will charge interest for any money borrowed and it's important when you're applying for a card to look for the lowest interest rate you can get. You will be asked to pay a minimum payment per month off your credit card but to avoid any charges or interest, it's best if you can pay off the full amount each month. Credit cards will incur charges for any late payments and these charges are set by the creditor so they can vary, making late payments will affect your credit rating. Late payments Late credit card payments will have a negative effect on your credit rating, it's important to make your payments to your credit card company on time every month. If you're paying a minimum payment every month and it is barely covering the interest, this is when you should seek help. Paying just the minimum payment is going to mean you're paying the debt back for a very long time, and it's going to reduce very little each month, if at all. How to reduce your credit card debt The first step to reducing your credit card debt is to stop spending on them, this will stop debt piling up on them. The next step is to try to make sure you meet each monthly payment on your credit card to stop you getting any charges, this will stop you getting any hassle from your creditors. Thirdly, you should try and pay more than just the minimum each month, even increasing your monthly payments a little can significantly reduce the time it takes you to pay back the debt. Finally, you can shop around for a credit card which has the lowest interest rate you can find and do a balance transfer over to that card, reducing the amount you are paying in interest.