The numbers regarding credit card debt are staggering. This credit card debt, compounded with higher living costs, has prompted the accountancy firm Grant Thornton to predict ?that 28,000 people would declare themselves insolvent in the first three months of this year, with the total eventually reaching 120,000 for the whole of 2008.?
FT.com reports that Alan Duncan, the shadow business secretary, has ?launched a scathing attack on the widespread credit card industry practice of offering zero per cent interest for short periods on purchases and debts transferred from other cards.? In his interview with the Financial Times, ?Mr. Duncan warned that vulnerable consumers were being ?seduced into (credit card) debt which if they had to pay interest they couldn?t possibly afford.??
Some other effects of credit card debt and the inability to pay this credit card debt on time are that you will be charged a late fee and your missed payments will be reported to credit rating agencies. When a negative report goes on your credit report, you will find it harder to secure credit in the future, and if you are able to find financing, you will be charged a higher interest rate than you would if you hadn't allowed your credit card debt to get out of hand. When you apply for a loan or a credit card after you've had a negative report put on your credit history, your potential lender will see this, and they'll have to make their decision knowing that you've been delinquent in your payments in the past.
There are several practical steps that you can take if you feel bound by credit card debt. The first is to simply stop charging. If you do not have enough in your current account to cover the cost of something, perhaps you need to go without. Secondly, call your credit card company and ask them for a lower interest rate. Explain your troubled economic situation, but beware of their seductive offers of balance transfers, etc. If neither of those steps alleviates your credit card debt enough, then consider coupling that effort with debt consolidation or with debt management.