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Relieving Your Credit Card Debt Burden
0% Interest Credit Cards
Each time you make a purchase with a high interest, high balance credit card, the rate is calculated on the new balance plus the interest that has accumulated. If you could put your new purchases on a low or 0% interest credit card, you would stop or slow the rate at which your debt grows. Catching your problem before credit reference agencies determine that you are a bad credit risk is important. Make a plan for your higher interest cards and pay off the balance with the intent of closing the account. Be aware that 0% interest terms usually only last from 3 to 9 months and that there is usually some type of balance transfer fee. This is a good short term solution, but might not help if you need a longer time to catch up.
Debt Consolidation
If you could stop the cycle of interest accumulation, you could begin to recover from debt. A debt consolidation loan can effectively do this. It is usually secured by collateral like a house and can combine credit card debt, car loans and unsecured loans into one, with an overall lower interest rate. A typical repayment term could be from 12 to 84 months. Carefully manage how you will use credit cards going forward. It might be wise to close all but one account to use for emergencies. Fees and interest rates may increase if payments are not made as agreed. Make sure you stay on track with your payments.
Equity Release Plans
Available to older UK residents, an equity release plan can allow you to use the value you already have in your house to fund a variety of expenses such as retirement or home improvements. Using this type of arrangement to pay off debt can be attractive. The attractiveness of an equity release plan is that the debt burden is eliminated without incurring more debt. It is only available to UK residents over 55 years old and can only be written for a percentage of the equity.