Debt into the right payback routines

AS ONE of the biggest spending seasons of the year approaches, tens of thousands of people in Scotland are going to be loading even more debt on to already straining credit cards.

If you are likely to be in that situation, now might be a good time to have a look at your credit card balances and make sure you are doing all you can to repay the debt as quickly as possible.

It’s easy to get into the habit of making minimum payments to credit cards every month and budgeting for that payment rather than working out how you are going to repay the whole balance over a manageable period of time.

Over the last few years, some credit card companies have reduced the minimum payment that people need to make every month.

But this is just making matters worse since all it means is it will take you longer to clear the balance and cost you more, often thousands of pounds, in interest charges. You should make sure the card you are using charges a competitive rate of interest and if you are paying too much, consider transferring your balance to a card with a lower rate of interest.

It might be possible to move to a card with zero per cent interest for the first year or two but look out for any upfront costs, which are usually a percentage of the balance you transfer. It is possible to wipe out any benefit of no-interest charges with a large upfront fee.

Once you have transferred, you need to change your habits. Don’t settle back into a minimum payment routine. Look at your budget and decide how much you can afford to pay every month and how long it will then take you to clear your balance..

Make sure you actually make the payments required. If you don’t make at least the minimum payments then the credit card company will charge you for every missed or late payment.