Christmas credit card spending has increased peoples debt problems more than ever. It is estimated that 1 in 3 people in the UK are concerned about their ability to pay their debts.
Today's society seems to think it acceptable to have credit card debts and the buy today worry about it tomorrow culture shows no sign of changing. People are also pressured into lavishing loved ones with gifts when in reality managing their finances would be a better option. We are all guilty of it and the banks do not help by sending mailshots enticing us to enjoy 0% interest rates on new purchases for 6 months etc.
The fact of the matter is, the debts we incur will have to be repaid at some point. When you have accumulated a large amount of debt on these cards, most of us opt to pay only the minimum payment but this is exactly where the credit card companies want us. We are then left paying monthly payments where we are barely covering the interest. This means that the debt is reducing extremely slowly and you will be left paying large amounts of interest for years to come.
The main reason why we should try to pay off these credit cards is that the interest rates are high and that is also why banks like them because they make lots of profit on the interest.
One way of clearing these credit card balances and making life more manageable is consolidating them into your mortgage. Because the interest rate on your mortgage is so much lower you will be paying less interest. However you do need to be wary of the fact that you are securing previously unsecured debts against your property. If you also extend the term of your mortgage you could also be paying more interest in the long term. If you are at the stage that you are struggling to make your credit card payments it could be considered as missed payments will be recorded on your credit profile and will limit your ability to get credit in the future.