Credit cards are the most frequent debt management plan creditor.

 

With high interest and low minimum payments, this debt is hard to clear.

 

For expert personal debt advice about credit card debt, please get in touch.

 

What Is A Credit Card?

 

It’s a plastic card used to buy goods and services on credit. The cardholder has a credit limit capping their borrowing.

 

Credit cards get issued by banks, building societies, and other financial firms.

 

They can be convenient and useful. They can also cause major debt management problems.

 

Why Credit Cards Are Causing Problems?

 

Britons love credit cards! The average adult has credit card debt of around £2,700 (and it’s increasing). In 2019 we have a £70bn credit card balance between us.

 

We’re not just borrowing more on our credit cards. We’re defaulting on them more. Many of us cannot afford to manage the debts that we have.

 

Credit card interest rates tend to be high. The minimum repayments tend to be low. This is a risky combination, a type of debt that is especially hard to clear.

 

People with poor credit ratings get targeted for sales. Some cards are presented as being “credit-building” options. This includes the likes of Vanquis, Aqua, Luma, Capital One, Ocean, thinkmoney, and Opus. Barclaycard and Tesco Bank also provide similar options. The interest rates are high. Fall behind on the payments and your credit score can plummet further.

 

Will Credit Card Providers Help If You Can’t Pay?

 

Credit card lending is risky for the lender. Interest rates get set high because many people default. Card providers know that some customers will suffer money trouble.

 

If you have a short-term money problem, call the card provider and explain. They may agree to you skipping a payment, for example.

 

If your money problems are more deep-rooted, it’s best to get debt advice. The adviser will provide you with suitable options to tackle your debts.

 

Debt management solutions also benefit credit card providers. They know you cannot repay money that you don’t have. A structured plan to make an affordable payment works well for all parties.

 

Credit card issuers are also subject to regulation. If a customer has financial difficulties, the lender must treat them fairly.

 

What does “treating you fairly” mean? It might mean offering you some “breathing space” while you get debt advice. It might mean accepting a reduced payment from you. Your credit card’s interest and charges might get suspended.

 

Debt Solutions For Credit Card Debt

 

A variety of debt management solutions are available.

 

They have two aims. Firstly, reduce your payments to an affordable amount. Secondly, clear your debts within a realistic period.

 

Debt Management Plan

 

With a debt management plan, your total monthly debt repayment gets reduced. It’s set at a level you can afford. It takes full account of your household bills and expenses.

 

This is a flexible debt solution. It can change if your personal situation changes. Debt management plans continue until your debts are fully repaid.

 

Credit card providers often agree to suspend interest and charges. With this support, you can steadily reduce your card balances.

 

Read more about debt management plans…

 

To find out if a debt management plan is right for you, contact us.

 

IVA

 

You commit to pay an affordable amount for an agreed period. This period is often five years. When your IVA commitments are completed, unpaid debt gets written-off.

 

Credit card accounts are included as an IVA creditor.

 

For residents of Scotland, a trust deed works similarly to an IVA. The agreed term for a protected trust deed is often four years.

 

Read more about an IVA…

 

To find out if an IVA or Scottish Trust Deed is right for you, contact us.

 

Bankruptcy

 

With bankruptcy, you’ll need to make payments for three years (if you can afford to).

 

For residents of Scotland, the bankruptcy repayment term is four years.

 

Unpaid debt gets written off when you’re discharged from your bankruptcy.

 

Credit card accounts get included as a bankruptcy creditor.

 

Debt Relief Order

 

Credit card balances get included in a Debt Relief Order (DRO).

 

A DRO is available if you have low disposable income and few assets. It’s not available in Scotland.

 

Debt Arrangement Scheme

 

This scheme is available to residents of Scotland. In many ways it works like a debt management plan.

 

You will have legal protection from your credit card debts. Interest cannot be charged.

 

Other Ways To Tackle Credit Card Debt Problems

 

Debt solutions are one method to tackle credit card debt. They’re not the best way for everyone.

 

We outline (below) some other options that might be suitable for you.

 

Interest-Free Balance Transfers

 

If your credit rating remains good, zero percent balance transfers might help. This could help you to reduce your credit balance.

 

This will only help if you can truly afford the monthly payment. If it isn’t affordable, you’ll likely build up further new debt. This would worsen your situation in the long-term.

 

You might have to pay a balance transfer fee. This will initially increase your credit card debt.

 

Interest-free periods are getting shorter. You may have to move your balances more often and incur more fees. There is no guarantee that a new interest-free card will be available in the future.

 

Unaffordable Lending Complaints

 

Providers of credit are required to lend responsibly. They should make fair checks that their client can afford to repay the lending.

 

If you’ve been given credit you had no chance of repaying, you can complain. The Financial Ombudsman investigates this type of complaint.

 

If you’ve suffered from unfair irresponsible lending, financial redress is possible. This might mean being repaid the interest that you’ve been charged. Your debt might be cleared or reduced as a result.

 

CCA Claims – Unenforceable Debts

 

This applies if you have old credit card debts that have been sold to debt purchasers.

 

Contact the debt collector and request a copy of the Consumer Credit Act agreement. This is the initial credit agreement made with the card provider.

 

If they can’t find it, your debt is unenforceable. Basically, they cannot take you to Court to recover what you owe them. You could decide to stop paying them (though the debt is still owed).

 

As explained by Debt Camel, you might still offer a small amount in full and final settlement. This would protect you if they later find the credit agreement.

 

Consolidation Loans

 

You might be tempted to take out a loan to clear your credit card debts. This can work well if you still have a good credit score. Cheap bank loans are available in this scenario.

 

If your credit rating isn’t perfect, it might be tough to get a loan. Any loan offered to you might be at a very high interest rate. You might be required to provide a guarantor to get the loan.

 

High cost loans can be an expensive and risky choice. Guarantor loans could put your family or friends at risk in the future.

 

Think carefully before consolidating credit cards into an expensive new loan.

 

Credit Card Passed to A Debt Collection Agency?

 

Card providers often outsource the collection of defaulted balances. They pass this work to Debt Collection Agencies.

 

Debt solution providers frequently deal with Debt Collection Agencies. If the collection of your debt has been outsourced, you can still access the debt management solutions described above.

 

What If Your Credit Card Debt Gets Sold?

 

There’s a major market for selling defaulted credit card debt.

 

Debt purchasers buy credit card accounts with a view to continuing collection. They might collect the money internally. They might instead outsource this activity to a Debt Collection Agency.

 

Debt solution providers frequently deal with debt purchasers. If your debt has been sold, you can still access the debt management solutions described above.

 

UK Credit Card Providers, Issuers, & Brands

 

118 118 Money

AA

Allied Irish Bank

Amazon

American Express

Aqua

Aquis

Asda Money

Bank of Ireland

Bank of Scotland

Barclaycard

Capital One

Chrome

Clydesdale

Creation Financial Services

Danske Bank

Debenhams

Diners Club

First Direct

First Trust

Fluid

HSBC

John Lewis

Lloyds

Luma

M&S

Marbles

Mastercard

MBNA

Metro Bank

Nationwide

NatWest

Ocean

Opus

PayPal

Post Office Money

Royal Bank of Scotland

Saga

Sainsburys Bank

Santander

Smile

Tandem

Tesco Bank

The Co-operative Bank

thinkmoney

TSB

Ulster Bank

Vanquis Bank

Virgin Money

Visa

Yorkshire Bank

 

 

Author: Andrew Graveson – Qualified Debt Adviser & Bright Oak’s Founder

 

Last Updated: 07/08/2019

 

 

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Credit cards are the most frequent debt management plan creditor.

 

With high interest and low minimum payments, this debt is hard to clear.

 

For expert personal debt advice about credit card debt, please get in touch.

 

What Is A Credit Card?

 

It’s a plastic card used to buy goods and services on credit. The cardholder has a credit limit capping their borrowing.

 

Credit cards get issued by banks, building societies, and other financial firms.

 

They can be convenient and useful. They can also cause major debt management problems.

 

Why Credit Cards Are Causing Problems?

 

Britons love credit cards! The average adult has credit card debt of around £2,700 (and it’s increasing). In 2019 we have a £70bn credit card balance between us.

 

We’re not just borrowing more on our credit cards. We’re defaulting on them more. Many of us cannot afford to manage the debts that we have.

 

Credit card interest rates tend to be high. The minimum repayments tend to be low. This is a risky combination, a type of debt that is especially hard to clear.

 

People with poor credit ratings get targeted for sales. Some cards are presented as being “credit-building” options. This includes the likes of Vanquis, Aqua, Luma, Capital One, Ocean, thinkmoney, and Opus. Barclaycard and Tesco Bank also provide similar options. The interest rates are high. Fall behind on the payments and your credit score can plummet further.

 

Will Credit Card Providers Help If You Can’t Pay?

 

Credit card lending is risky for the lender. Interest rates get set high because many people default. Card providers know that some customers will suffer money trouble.

 

If you have a short-term money problem, call the card provider and explain. They may agree to you skipping a payment, for example.

 

If your money problems are more deep-rooted, it’s best to get debt advice. The adviser will provide you with suitable options to tackle your debts.

 

Debt management solutions also benefit credit card providers. They know you cannot repay money that you don’t have. A structured plan to make an affordable payment works well for all parties.

 

Credit card issuers are also subject to regulation. If a customer has financial difficulties, the lender must treat them fairly.

 

What does “treating you fairly” mean? It might mean offering you some “breathing space” while you get debt advice. It might mean accepting a reduced payment from you. Your credit card’s interest and charges might get suspended.

 

Debt Solutions For Credit Card Debt

 

A variety of debt management solutions are available.

 

They have two aims. Firstly, reduce your payments to an affordable amount. Secondly, clear your debts within a realistic period.

 

Debt Management Plan

 

With a debt management plan, your total monthly debt repayment gets reduced. It’s set at a level you can afford. It takes full account of your household bills and expenses.

 

This is a flexible debt solution. It can change if your personal situation changes. Debt management plans continue until your debts are fully repaid.

 

Credit card providers often agree to suspend interest and charges. With this support, you can steadily reduce your card balances.

 

Read more about debt management plans…

 

To find out if a debt management plan is right for you, contact us.

 

IVA

 

You commit to pay an affordable amount for an agreed period. This period is often five years. When your IVA commitments are completed, unpaid debt gets written-off.

 

Credit card accounts are included as an IVA creditor.

 

For residents of Scotland, a trust deed works similarly to an IVA. The agreed term for a protected trust deed is often four years.

 

Read more about an IVA…

 

To find out if an IVA or Scottish Trust Deed is right for you, contact us.

 

Bankruptcy

 

With bankruptcy, you’ll need to make payments for three years (if you can afford to).

 

For residents of Scotland, the bankruptcy repayment term is four years.

 

Unpaid debt gets written off when you’re discharged from your bankruptcy.

 

Credit card accounts get included as a bankruptcy creditor.

 

Debt Relief Order

 

Credit card balances get included in a Debt Relief Order (DRO).

 

A DRO is available if you have low disposable income and few assets. It’s not available in Scotland.

 

Debt Arrangement Scheme

 

This scheme is available to residents of Scotland. In many ways it works like a debt management plan.

 

You will have legal protection from your credit card debts. Interest cannot be charged.

 

Other Ways To Tackle Credit Card Debt Problems

 

Debt solutions are one method to tackle credit card debt. They’re not the best way for everyone.

 

We outline (below) some other options that might be suitable for you.

 

Interest-Free Balance Transfers

 

If your credit rating remains good, zero percent balance transfers might help. This could help you to reduce your credit balance.

 

This will only help if you can truly afford the monthly payment. If it isn’t affordable, you’ll likely build up further new debt. This would worsen your situation in the long-term.

 

You might have to pay a balance transfer fee. This will initially increase your credit card debt.

 

Interest-free periods are getting shorter. You may have to move your balances more often and incur more fees. There is no guarantee that a new interest-free card will be available in the future.

 

Unaffordable Lending Complaints

 

Providers of credit are required to lend responsibly. They should make fair checks that their client can afford to repay the lending.

 

If you’ve been given credit you had no chance of repaying, you can complain. The Financial Ombudsman investigates this type of complaint.

 

If you’ve suffered from unfair irresponsible lending, financial redress is possible. This might mean being repaid the interest that you’ve been charged. Your debt might be cleared or reduced as a result.

 

CCA Claims – Unenforceable Debts

 

This applies if you have old credit card debts that have been sold to debt purchasers.

 

Contact the debt collector and request a copy of the Consumer Credit Act agreement. This is the initial credit agreement made with the card provider.

 

If they can’t find it, your debt is unenforceable. Basically, they cannot take you to Court to recover what you owe them. You could decide to stop paying them (though the debt is still owed).

 

As explained by Debt Camel, you might still offer a small amount in full and final settlement. This would protect you if they later find the credit agreement.

 

Consolidation Loans

 

You might be tempted to take out a loan to clear your credit card debts. This can work well if you still have a good credit score. Cheap bank loans are available in this scenario.

 

If your credit rating isn’t perfect, it might be tough to get a loan. Any loan offered to you might be at a very high interest rate. You might be required to provide a guarantor to get the loan.

 

High cost loans can be an expensive and risky choice. Guarantor loans could put your family or friends at risk in the future.

 

Think carefully before consolidating credit cards into an expensive new loan.

 

Credit Card Passed to A Debt Collection Agency?

 

Card providers often outsource the collection of defaulted balances. They pass this work to Debt Collection Agencies.

 

Debt solution providers frequently deal with Debt Collection Agencies. If the collection of your debt has been outsourced, you can still access the debt management solutions described above.

 

What If Your Credit Card Debt Gets Sold?

 

There’s a major market for selling defaulted credit card debt.

 

Debt purchasers buy credit card accounts with a view to continuing collection. They might collect the money internally. They might instead outsource this activity to a Debt Collection Agency.

 

Debt solution providers frequently deal with debt purchasers. If your debt has been sold, you can still access the debt management solutions described above.

 

UK Credit Card Providers, Issuers, & Brands

 

118 118 Money

AA

Allied Irish Bank

Amazon

American Express

Aqua

Aquis

Asda Money

Bank of Ireland

Bank of Scotland

Barclaycard

Capital One

Chrome

Clydesdale

Creation Financial Services

Danske Bank

Debenhams

Diners Club

First Direct

First Trust

Fluid

HSBC

John Lewis

Lloyds

Luma

M&S

Marbles

Mastercard

MBNA

Metro Bank

Nationwide

NatWest

Ocean

Opus

PayPal

Post Office Money

Royal Bank of Scotland

Saga

Sainsburys Bank

Santander

Smile

Tandem

Tesco Bank

The Co-operative Bank

thinkmoney

TSB

Ulster Bank

Vanquis Bank

Virgin Money

Visa

Yorkshire Bank

 

 

Author: Andrew Graveson – Qualified Debt Adviser & Bright Oak’s Founder

 

Last Updated: 07/08/2019

 

 

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