Debt Doubles with Minimum Payments
Shoppers could find that the bargain items in the summer sale could cost them double the amount if they purchase them on their credit card and only make the minimum repayments.
Moneyfacts.co.uk calculated that a £3,000 debt on a credit card at an interest rate of 15.9% APR would take 25 years to clear if only the minimum payment (2.5% of £2) is made each month. This would lead to a staggering £2,279.16 worth of interest being paid on the original debt!
The site has revealed that more families are turning to credit in order as disposable income is reduced, meaning that many will have to seek debt advice in order to regain control of their finances.