Credit Card and Loan Debt
Credit & store cards
Introductory offers, limit’s increased and choice of card designs make credit and store cards very appealing. However, in reality how many of us realise what the permanent rate is once the enticing introductory offer is over?
Advertising can be confusing comparing permanent rates of rival firms with their introductory rates. Also as credit and store cards are revolving types of credit agreements i.e. no fixed payment and no fixed term you can be paying them for years and still have an outstanding balance similar to what you have borrowed when paying your minimum payment each month. Recently, they have had to put warnings on statements to advice of this – a little bit too late for the majority of us.
Late payment charges vary from £10 - £30 depending on the lender and similar charges for exceeding the credit limit or for bounced payments. Some companies do not even allow you to pay via a debit card over the phone almost ensuring you will be charged as paying through a bank can take up to 4 days to credit the account and if the payment is going to a non-clearing bank it may take up to 10 days.
Loan arrears
There are two types of loans
- No fixed payment and no fixed term – normally called a “flexi” loan these work similar to credit cards and you can pay this for the unforeseeable future. Recently, lenders are looking to put this on to a fixed term but at the current balance.
- Fixed payment and fixed term – this is when you pay a fixed amount on a set date until the loan matures.
Customers are not aware that if they pay instalment late they will accrue additional interest as well as a late payment charge. Again late payment charges can vary from £10 - £25. Customers who then reach the end of their loan agreement are hit with a large final payment as this will include interest accrued over the time the payment was outstanding for. Alternatively, creditors can put a payment at the end of the loan to bring your account up to date and have historically advised this will add a month to the end of the loan but in reality can be a number of months as the interest will also be spread over the remainder of the term of the loan.
Whatever your circumstances we can help TODAY call our debt free line 0800 092 0455
