Skip to main content Accessibility Statement
credit card cut up

Don’t get sucked into the borrowing boom

Did you know we’re borrowing more on credit cards now than at any point since the financial crash?

It comes with a warning though - if you don’t manage your spending and repayments, it could end up costing you far more than you expect.

As a nation, we’re spending £20million a day on credit cards, with the total owed on plastic a huge £1.44billion, says the Bank of England.

Some people will be managing this borrowing perfectly well – but others could be losing out. Take a look at our five simple credit card tips to work out which group you’re in.

1. Always try to pay off the balance in full every month

There are some advantages to credit cards. Some are designed to allow fee-free spending abroad, while others can earn you cashback or reward points. You also get some handy consumer rights if you pay by credit. These can be good, but only if you pay off the balance in full every month.

Fail to do that and the interest you’ll be charged will be far more than what you gained in the first place. If you can’t do it, don’t use one of these specialist cards.

2. Pay back as much as you can each month

If you’re not able to clear the debt, at least pay back as much as you can – and this means more than the minimum repayment.

If you only make the minimum repayment your debt could take years to pay off and in that time you could pay thousands of pounds in interest.

3. Having savings at the same time as credit card debt

Yes, it is a good thing to have a savings buffer to help cover emergency costs. But if you’re paying 18% on £500 on a card, but only earning 1% on £500 in savings, you’re actually losing money.

Instead, consider the credit card you clear with the saving as your emergency buffer (and I mean emergency), while you start rebuilding your savings.

4. Store cards are credit cards

It’s easy to think of store cards as something different to a credit card, especially as they often come with a big introductory discount to spend in the shop. But they come with the same potential problems as credit cards – and often have even higher interest rates.

So if you can’t follow point one and clear the debt each month, these will probably be even more expensive than a standard credit card.

5. Ask if you really do need to spend on credit card

If you’re out of cash and credit is the only way to afford a purchase, then think carefully about whether it’s worth it. Do you really need it? Can it wait until you’ve saved up?

Paying for essentials like food or bills on credit cards is an early warning sign that you could have problem debt. Carry on like this for more than a few months and the situation could become quite grim – if it’s not already.

The answer in these situations is to seek free debt advice. Here you’ll get some help  to look at your financial situation and work out what you should do to get you and your money into a healthier state.

What do you think?

We really want you to share your views, but please remember to be nice ☺
All fields are required. Check out our full commenting guidelines

By clicking on 'Post Comment', you're agreeing to our Commenting Policy