press release

With consumers finding their budgets squeezed by increased petrol, energy and mortgage costs, the temptation to repay only the minimum balance on your credit card becomes much greater.

The calculations below highlight that this really is a false economy and by increasing your minimum repayment by just 1% on a £3k debt at 18.9% APR will save you over £1,200 in interest costs.

If someone told you that your £3,000 purchase(s) would cost you a total of £6,011.45 and take you over 20 years to repay, you would think you’d be mad to entertain such a purchase, but because consumers don’t appreciate the real cost of their credit card spending with low minimum repayments, many will just carry on regardless.

Whilst credit cards used correctly can be a great way to ease a temporary cash flow problem, they can prove to be a real financial albatross round your neck if you slip into the habit of only repaying the absolute minimum.

If you find yourself with a balance that is proving difficult to clear, then perhaps it’s time to switch the balance to a personal loan and destroy that costly piece of plastic.

* BBA/BSA data, April 2007