CCCS warns on minimum payments on credit cards

Experts at the Consumer Credit Counselling Service have urged credit card holders to make more than the minimum payment on their credit card balances.

The charity organisation go on to say that as most of the minimum payments goes towards the interest on the card leaving the principal balance practically untouched.

Despite being charged extortionate levels of interest an alarming number of consumers in the UK make only the minimum repayment on their credit cards each month, making a minimal impact on their balance, leaving themselves in debt for long periods, and resulting in hefty interest charges.

The Consumer Credit Counselling Service has also expressed concern over this trend, stating that consumers in the UK could be putting themselves at real risk of falling into unmanageable debt levels as a result of making only minimum repayments. Although the Consumers Credit Counselling Services says that the majority of cardholders are using their credit cards sensibly officials also state that those that insist on making minimum repayments each and every month could be heading for real financial problems.

A spokesperson for the CCCS stated: "The main thing about people who have either store cards or credit cards is not just to pay the minimum amount back every month. That's the main thing that leads people into debt."

It is thought that a £2000 balance on a credit card could take around twenty years to pay off if only the minimum repayment is made every month. However, the good news is that over fifty percent of consumers are now repaying their credit card balances in full each month.

Those with existing credit cards balances with high interest rates could save money on interest by transferring their balances on to 0% balance transfer cards and then repaying the balance before the interest free period expires.

Tom Smith
5th June 2007