Credit Card Debt Management
Posted September 21st, 2009 Credit card debt management should be second nature to anyone carrying a credit card. Not doing so is foolish and extremely risky. By applying for a credit card we effectively enter into a contractual agreement between the lending institution (often a bank) and ourselves. Since penalty rates on credit cards are usually very high it is important for you to understand the ins and outs of your card helping you to better manage your credit card debt in the process.
How to manage your credit card debt
The first step in credit card debt management is to understand your responsibilities i.e. what is expected of you by your card lender. Every card comes with its own deal and a common rule is that you have to pay off your card in full each month otherwise you are faced with expensive interest rate charges and penalty fees.
Once you are in debt the process becomes more serious and involves negotiations with your creditor. You can either do this by yourself or with the help of a qualified credit card debt management company.
What a credit card debt management plan can do for you
The company who helps you manage your debt will devise a debt management plan to help you pay off your debt in the quickest time frame possible. Here are some tasks they will do on your behalf:
- Contact your creditor (your card company) and negotiate a better deal; for example they could bargain for better interest rates, or even get them frozen for the time being allowing you to manage your card debt better
- Devise a payment plan that will allow you to distribute the money you can to all your debts in order of importance
- They will analyse the status of you as the debtor in regards to how many credit cards you owe, how big the debt is, your current employment situation and your income
Once they devise the right credit card debt management plan for you they will then work with you to help you get rid of your debt. The plan usually stays in operation until you clear your outstanding payments for good. Another description often used for this service is credit card consolidation.
Debt management tips to avoid/reduce credit card debt
Even so just about any debt can be tackled one way or another, it helps if you are acting in a responsible way to start with.
- Minimise the amount of credit cards you are using to minimise the dangers of credit card debt
- Only spend what you can afford
- If you are a compulsive spender, perhaps you should try credit card counselling
- Use a credit card with a low interest rate
- Consider a balance transfer card with a honeymoon (interest-free) period
- Get into the habit of checking your monthly credit card statements
Being informed and acting with responsibility is half the battle when it comes to credit card debt management.
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Comparison of Top 10 Credit Card Offers
| Credit Card | Card Details | Interest Rate | Cash Advance Rate | Balance Transfer Rate | Annual fee | Interest free days | ||
|---|---|---|---|---|---|---|---|---|
 Halifax All in One Credit Card |
The Halifax All in One credit card offers a great introductory rate, and is perfect for saving you money now as well as in the future. | 15.9% APR | 27.95% p.a. (variable) | 0% for 9 months | No Annual Fee | 59 Days interest free |
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 Virgin Credit Card |
As well as a great rate, the Virgin Credit Card comes with:
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16.6% APR (variable) | 27.9% p.a. (variable) | 0% for 16 Months (2.98% fee on balance transfers) | No Annual Fee | 50 days on card purchases |
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 Capital One Classic Visa |
This card is designed for people with bad credit ratings, this is why the rate is quite high. |
Typical 34.9% APR variable | 34.9% APR | 34.9% APR | No Annual Fee | 56 days for purchases. 0 days for balance transfers and cash. |
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As well as earning Flying Club miles which you can spend on brilliant rewards like flights, upgrades, car hire and more, a Virgin Atlantic Credit Card gives you up to 46 days interest free on card purchases. |
17.9% APR typical rate | 20.9% p.a. (variable) | 0% for 6 months (2% handling fee) | No Annual Fee | Up to 46 days on card purchases only. |
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The Virgin Prepaid MasterCard from Virgin Money is a prepaid Mastercard that you can add funds to, and use these funds for normal purchases. |
N/A | N/A | N/A | N/A | N/A |
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5% cashback on purchases in your first three months (up to £4,000 of spend). Thereafter, earn 0.5% on the first £3,500, 1% on £3,501 to £10,000, and 1.5% after £10,001. |
18.9% p.a. | 27.9% p.a. | 18.9% p.a | No Annual Fee | 56 days for purchases. 0 days for balance transfers and cash. |
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Vanquis Visa Card is designed for people with no credit history or who have previously had bad debt. Representative 39.9% APR (variable) |
Representative 39.9% APR (variable) | 39.9% | N/A | No Annual Fee | Up to 56 days on card purchases only |
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The award winning prepaid card with no credit check or bank account needed. | Funds in your Account will not earn interest | Prepaid only - N/A | Prepaid only - N/A | £59.40 p.a. (£4.95/month) | Prepaid only - N/A |
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