Over a third of Brits have no clue about how much they owe on credit cards, according to worrying new research. They are also in the dark about what interest rates they are being charged, which means that many will be in for a rude awakening when they next check their statements. This is not a great state of affairs, but, it does not need to be this way.
The survey, conducted by credit agency Equifax, also showed that around 40% of the 3000 people interviewed rely on their credit card for everyday living expenses. This is a terrifying statistic that shows just how easy it is to find yourself dependent on expensive credit and facing a major debt problem.
Worried about debt
It was also shown that one in five people pay less than a quarter of the bill each month, with many paying no more than minimum payments. This means that they will end up paying a lot of money in interest and the debt will be hanging over them for a long time to come. But with 60% of credit card users having no idea what interest rate their card is at, it is no surprise that many people are not paying much of their credit card bill.
No money left over
The survey also revealed that 10% of people are left with no money in the week leading up to payday, while the next 10% were not much better off with only 10% of their wages left. Neil Monroe from Equifax said: “Even with the latest news that inflation has dropped, it’s still hard for families to balance living costs with many not having a salary increase so far this year.”
He goes on to explain what steps you should take if you are worried about debt and are struggling to pay the bills: “We think it’s very worthwhile to try to carry out a financial health check at least once a year, just to review overall finances and give them the control they need to effectively manage their debts.”
Understand your credit card – the things to watch out for
There may be financial factors that are out of your hands, but there are other aspects of managing your money that there is no excuse for not being aware of. If you fail to keep track of what you owe, you could easily find yourself owing a lot more as a result.
Paying minimum payments will only take a few pounds off your bill, so you cannot assume that your balance will look much different in a few months time. Equally, without looking at your balance from time-to-time you may not notice if you have missed a payment, which could result in fees being added to your balance. You may under-pay by accident, which can also result in a charge. For example, if you pay only a few pennies below the correct amount on a Barclaycard you can expect £12 to be added to your bill. This will likely take up to three months to pay off at minimum payments, unless you have a current 0% interest deal.
If you still cannot afford your living expenses, then it may be time to consider other forms of financial help. It is free and easy to phone experts who can give you professional personal finance advice. The sooner you get help with your finances, the better. If you take steps to solve your financial problems you are likely to feel better, and you could find yourself with more breathing room before payday comes around again.