Tackling Credit Card Debts

Credit cards are the most common Scottish trust deed creditor.

With low minimum payments and high interest, such debts are hard to clear.

For expert debt advice about your credit cards, please get in touch.

What Is A Credit Card?

It’s a plastic card used to purchase services and goods on credit. The borrowing level gets capped by a credit limit.

They’re issued by banks, building societies, and other financial firms.

They can be handy and convenient. They’re useful when travelling. They can also cause serious money problems.

Why Do Credit Cards Cause Debt Problems?

We love credit cards! The average UK adult has £2,700 of credit card debt. This figure is growing.

We’re defaulting on our credit cards more. This is a serious warning sign. Increasing debt will result in increasing default levels.

Credit card interest rates are often high. The minimum payments usually low. This combination is risky. Credit card debt is very hard to clear.

You might think a bad credit rating would put credit card providers off? The opposite can be true. Those with poor credit records are attractive marketing targets. Some cards get described as being “credit-builders”. This includes cards like Capital One, Vanquis, Aqua, Luma, and Oceans. Even Tesco Bank and Barclaycard offer similar products. The interest cost is high. Get behind on your payments and your credit rating will further suffer.

Will Credit Card Issuers Help You Out?

Credit card lending is a risky business for the lender. Interest gets set high due to high default rates. They know some people will be unable to keep up.

If you have a temporary payment problem, contact the card issuer to discuss this. They may offer some short-term flexibility.

If your money problems are more serious, it’s best to get expert debt help. The adviser will identify how you can address your debts.

Debt solutions also benefit the issuers of credit cards. It’s understood that you cannot repay money you’d don’t have. An agreed solution, making an affordable payment, suits everyone.

Credit card providers are also subject to rules. If you have money problems, the card provider needs to treat you fairly. They should be sympathetic and helpful.

They might mean accept a reduced payment from you. They might suspend interest and charges. They might give you “breathing space” while you identify a solution.

Solutions To Credit Card Debt Problems

For residents of Scotland, there are a number of options.

Check our home page, for details of our main debt solutions

Other Methods To Address Credit Card Debt Issues

Debt solutions aren’t the best choice for everyone. Other credit card debt strategies include:

Zero % Balance Transfers

If your credit rating is good, interest-free balance transfers might help. This could open the door to reducing your overall debt total.

This is only of use where the monthly repayment is manageable. If it’s too high for you, you’ll probably build up new debts. Your financial health could get worse rather than better.

There’s often a balance transfer fee to pay. Your credit card debt will increase when this is added.

Zero interest terms are reducing. You may need to shift cards more often. You may incur more in fees. You can’t be sure that a new zero interest card will be available in the future.

Complaints – Unaffordable Lending

All consumer credit lenders are required to lend responsibly. They should investigate your capacity to cover your debt repayments.

What if you’ve been lent money you had no chance of repaying? You can make a complaint to the lender. If you don’t like their response, take your case to the Financial Ombudsman.

If the lender hasn’t acted responsibly, compensation is possible. A refund of the interest you’ve paid is a potential outcome. This could help to reduce or clear your debt.

Unenforceable Debts – Consumer Credit Act Claims

Do you have old credit card debts that were sold on? This option might apply to you..

Get in touch with the new debt collector. Ask for a copy of the Consumer Credit Act agreement. This is your contract from when the debt was first taken out.

If they can’t produce it, your debt becomes unenforceable. They can’t use legal procedures to recover your debt. You might choose to stop paying them (but remember that your debt is still owed).

Some people offer a small “full and final settlement” at this stage. This protects you in event they locate the original credit agreement later.

Debt Consolidation Loans

Are you thinking about getting a loan to clear your credit card balances? With a good credit score, this might work well. A cheap bank loan can be affordable and save money.

If your credit rating is poor, cheap loans might be unavailable. You might be offered an expensive loan with a high APR. You might have to get a guarantor in order to get the loan.

Expensive loans are a risky choice for you. Guarantor loans could cause big problems for your family or friends in the future.

Think carefully before consolidating debts with a pricey loan.

Debt Collection Agencies

Has your credit card account been passed to a debt collection agency?

Debt solution providers deal daily with debt collection agencies. You can still use debt solutions such as a trust deed.

Credit Card Debts Getting Sold

Defaulted credit card debt of often sold on.

Debt purchasers acquire credit card balances. They plan to continue collecting it. They might handle collections themselves. They might use a debt collection agency instead.

Debt solution providers frequently deal with debt purchasers. You can still use debt solutions such as a trust deed.

Major UK Credit Card Providers, Issuers, & Brands

Using Credit Cards During Your Trust Deed

Entering a trust deed does not prevent you from using credit. There is no rule that stops you. Doing this is risky and a bad idea.

No allowance is made to fund the payment of a new credit card. It will become hard to make the payments. You might have to cut back on more important needs.

If the situation gets really bad, your trust deed could fail. You’d be back to square one.

Speak to your trustee if you have a money emergency. They might suspend your payment. This is a better option than acquiring costly new credit.