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| English: First 4 digits of a credit card (Photo credit: Wikipedia) |
With 2013 just around the corner many will
be making new year’s resolutions about how they are going to join the gym, stop
eating chocolate or fix their finances. While these pacts are all made with the
best intentions, come Mid-February the majority of people will revert back to
their old ways and forget about their resolution.
The one resolution that we are going to
focus on throughout this article is the one regarding finances; and the various
ways you can go about consolidating debt.
Debt can come in many forms, however
arguable the most common is credit card debt; whether you've slowly amounted
debt or have maxed it out in a matter of one purchase; getting it off your back
is not that easy. Making minimum payments will chip away at the amount however
depending on the amount owed and the interest rates attached; this method can
take a number of years.
Arguably the best way to get rid of credit
card debt is to transfer the complete debt over to a 0% balance transfer card.
These work on the basis that you are charged no interest for a specific time frame;
instead you will be charged a small transfer fee of roughly 3% of the balance.
The idea of a 0% balance transfer card is
that you pay the complete balance off within the 0% interest time frame –
failing to do this will result in you being charged interest each month after
the 0% timeframe. Of course, one way of avoiding interest is to transfer the
remaining balance over to another 0% interest card and continue to repay the
debt that way.
The only problem with 0% balance transfer
cards is their availability. Often, only those with immaculate credit histories
will be eligible, therefore anyone with missed payments or defaults on their
record will be declined.
When this is the case there are still a few
options available. Many choose to take out a debt consolidation loan, much like
credit cards, the cheapest rates will be reserved for those with immaculate
credit history meaning that if you have had trouble with credit commitments in
the past then the subprime loan market may be the only option.
Naturally, with subprime lenders offering
finance to those with bad credit they will be less willing to lend large
amounts and the rates will be much higher. Generally credit card debt will
range from £1,000 to £10,000 and there are only two types of subprime loans
that offer this amount; guarantor and logbook loans.
Logbook loans are loans that are secured
against your vehicle, the amount offered by the lender will be dependent on the
value of the car. The rates may however be more expensive than the interest
rates of your credit card, although they are one way you could organise your
debt if you have more than one credit card.
Guarantor loans are a unique loan product
that requires the backing of an individual to stand as guarantor on the loan
application. The guarantor simply supports the application and promises to pay
if the borrower fails to do so. Guarantor
loan lenders will be able to offer between £1000 and £7,500 over a term of
1 to 5 years.
Author
Bio: This article has been written by Jason Scott
on behalf of UK Credit Guarantor
Loans. To learn more about the loan market or for more money saving tips,
visit their website and click on the blog section.
Great post, there's some great advice for credit card debtors like myself. I'd rather not get a Guarantor loan though. Those have very bad reviews!
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