Those who take out credit cards with low or zero per cent introductory rates could be setting themselves up for a financial problem in the future, it …
Those who take out credit cards with low or zero per cent introductory rates could be setting themselves up for a financial problem in the future, it has been stated.
Spokesman for Moneynet.com Andrew Hagger warned this is something many people may be prone to do, even though a normal credit card application would see the customer look closely at how much the annual purchase rate (APR) is.
He continued: “With the interest free deals people tend to try and find the longest deal they can, so it can be 17, 18 or 20 months perhaps and they don’t really pay attention to when it finishes. I think that’s probably more where the problem lies.”
And this can lead to major debt problems, the expert suggested, with “higher than average” rates when the card reverts to its normal charges hitting those in debt hard.
Those who have fallen into this trap and have suddenly found themselves being charged high rates of interest could find seeking an individual voluntary arrangement (IVA) is the best way to deal with their situation.
An IVA will help reduce the amount owed by writing off interest and setting up reduced repayments to be paid off over a period of up to five years.
Provided these are met, any remaining debts will be cancelled at the end of this period, creating a fresh start.
Mr Hagger’s comments about introductory rates come after recent research by MyVoucherCodes.co.uk revealed 52 per cent of Britons have taken out credit without first checking the APR.
By James Francis