Credit card debt ‘must be paid off at above minimum rate’

Those with credit card debt must look to pay it off at more than the minimum level, an expert has said.

Editor and director of consumer finance advice website CashQuestions.com Annie Shaw acknowledged that for those owing a large amount of money now, paying it all off is not easy as they face problems like unemployment and inflation.

But, she advised: “You should always attempt to pay more than the minimum each month, because that then starts to eat into the capital that you owe and means that the next month your minimum would then be slightly less.”

The example she gave of how progress could be made would be to make a payment of £20 and then find that the following month the minimum is £19, yet pay £20 anyway, a method of debt consolidation that can “make a big difference”.

Ms Shaw said just paying the minimum each month will ensure it takes “years and years” to clear the card.

Such advice may be considered by those whose debts are mainly piled up on plastic and who do not want to end up loading on the interest by allowing balances to linger.

This advice, of course, is pertinent to credit cards, rather than loans where the balance comes down each month due to a regular schedule of set payments.

However, the burden of paying off loans can be difficult to deal with, not least when a loss of income makes the regular amounts unsustainable.

Commenting recently, managing director of the Debt Advice Foundation David Rodger said people should seek advice to find the right solution to their debt problem according to the specifics of their circumstances.

By Joe White