Switch Credit Card Debt To A Personal Loan To Save Money

With a third of people in the UK saying their personal debt has increased in the last year, it may be time to look at switching credit card debt to a personal loan to save money.

According to moneysupermarket.com the average amount of UK personal debt, not including mortgages, is just over £8,400.

With the average credit interest rate of 18.43%, by paying the minimum monthly repayments of 3% on this, it would take over 24 years to pay off and cost and £7,488 in interest.

In contrast, switching to a personal loan at a market leading rate of 6.8% over five years you would pay only £1,490 in interest – an interest saving of £6,000.

Whilst paying the minimum amount each month means added interest costs, it is vital that at least this amount is paid off. Missing a payment or making a late payment could result in you forfeiting your promotional rate or incurring fees as well as putting a black mark on your credit file.

As Tim Moss, head of loans and debt at moneysupermarket.com says “There is no need for consumers to bury their heads in the sand when it comes to their finances and by taking steps to reduce personal debt, many of these problems can be nipped in the bud early on, before they escalate out of control.

Trimming down household budgets and ensuring they are paying as little as possible for all their financial products can really help to free up some cash to pay down debt, and should be the first port of call for anyone who is struggling.

If you are in the fortunate position where you are able to consolidate your debt, an interest free credit card would always be a good solution. Alternatively, a personal loan could be an option if you want fixed repayments and pay down your debt over a set period of time. For those in more serious trouble, I would advise seeking help from one of the free debt advice charities who can help.”

MoneyHighStreet.com comment: Whether on a credit card or using other finance, it’s so easy to spend, spend, spend but do you know how much you can spend before falling into debt? Do you know what your  income is compared with your expenses? To help with your personal finance, you may find it worth while taking a look at our article ‘Why make a Budget?‘