Nick White, head of personal finance at consumer finance website uSwitch.com, said that those with credit card debt risk having it mount up if they only repay small amounts.
“If you borrow on your credit card and then make the repayments in small amounts, it will cost you more,” said Mr White. “The interest will build up and only paying the minimum amount will do little to stop this.”
He added: “Lenders should do a lot more to help consumers understand the implications of borrowing and repayments.”
He suggested that statements include warnings, but added that consumers should look at the overall cost and consider their debt management when it comes to credit card debt.
One way of achieving this could be the ‘snowballing technique’, something which is advocated by ClearDebt marketing director, Andrew Smith.
He said: “If you are still only a little way down the debt track and can still pay your bills when they fall due, then stop using your credit cards and put all the money you can afford into repaying your most expensive credit card or loan first. Then move onto the next most expensive, and so on. This can slash months off the time needed to repay your debt.
“Of course, you must keep making the minimum payments on all your cards and loans, and you must keep an eye on changing interest rates too.”