Watch out for minimum credit card repayments

If you leave credit card debt repayments set at the minimum payment, it will take decades to pay off the debt, and cost many times the debt in interest.

For example, £3000 at 18.9% can take 28 years to pay off, and cost £4700 in interest!

This is because the repayments are set as a small percentage of the balance and so reduce as the balance reduces, taking forever to reduce the debt. The lenders encourage minimum repayments because it makes them a fortune.

As simple strategy to beat this yet still keep repayments affordable, is to set up a standing order to repay a set amount each month. Even if this payment is only the same as the current minimum repayment, it doesn't reduce and pays off the debt much quicker.

For example, repaying £3000 at 18.9% at £74 per month will take just over 5 years and cost £1500 in interest.

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Representative example for a loan of £4,000 for 24 months at an interest rate of 15.5% APR fixed. In this example the total amount payable (including interest and fees) would be £4633.57 and your monthly repayments would be £193.07.

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