Debt -
Brits pay 6 billion too much on credit cards - 03/06/2008
|
According to the comparison site moneysupermarket.com, Brits are paying up to an incredible £6 billion excess purely because they do not understand fully, the terms and conditions on their credit cards. Today many Brits have opted for zero percent balance transfer and low promotional rate credit cards, however due to a lack of understanding of how they function, the average consumer of these products could be paying up to as much as £200 in each interest payment alone.
The reason for this is because the card companies pay off the cheapest balance initially, then they leave the most expensive debt to accumulate interest. So for example if you happen to have a zero percent rate on balance transfers and a standard rate of 15.9%, usually the amount you pay is put towards reducing the amount of money that stands on your interest-free deal. This means any new spending will begin to accumulate interest at the average rate of 15.9%.
So for someone who owes £3,500 on their card, (£2,000 on a balance transfer, £1,000 on normal spending, £500 withdrawn in cash) The implications for someone who does this is, that the procedure of minimising the interest-free segment of their debt primarily, will mean they fork out £200 more in interest.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|