Pay off debt quicker by increasing your direct debit payment to just a small percentage more than the minimum payment and be amazed at the difference it could make. Comparison website moneysupermarket.com are urging those with credit card debt to increase their direct debit payments in order to pay off debt quicker.
The site gave the example of a consumer who owes £1,000 on a 16.9 % APR credit card. When making a 2% minimum payment, the consumer earns £151.74 in interest and only reduces the credit card debt down to £920.60. Whereas someone who paid 10% would pay off the debt in just 12 months, and almost half the amount of interest acquired (£79.16).
Thus showing how just a small increase in the monthly direct debit payment can really make a difference when it come to paying off your debt.
Peter Harrison, credit card expert at the site, said: “If you opt to increase your repayment amounts you will reduce your debt and the interest paid significantly. Even if you are with one of the few lenders that won’t allow you to set you direct debit higher than the minimum repayment, you can set up a standing order at a larger monthly amount.”