Consumer debt remains one of the single biggest issues afflicting the UK, as citizens struggle to manage their monthly repayments and continue to accrue a substantial financial burden. As of May 2012, the average amount of unsecured household debt in the UK was £7891, which was a significant increase on 2011 and the 5 year period before 2008.
Credit card debt accounts for the vast majority of consumer liability, and there are a number of reasons for this. The most important is the convenience that credit cards offer to consumers, which dictates they are used even more frequently when cash flow is diminished. Secondary to this is the high rate of interest that credit cards typically have associated with them, which make it difficult to repay even minimal debts over time.
Not only do these reasons partially explain the high levels of credit card debt in the UK, however, but they also make it extremely difficult for individuals to repay their liability. This is especially true in a struggling economy, where unemployment is rising and the levels of disposable income continue to fall. Despite the economic gloom there remain slithers of light, however, so long as you are willing to be disciplined and be proactive in attempting to reduce your credit card debt.
Consolidate Your Debt Where Possible
One of the most debilitating aspects of credit card debts emerges when you have more than one individual liability, as managing multiple payments can be difficult when money is tight. It is important to settle and close as many accounts as possible, or perhaps transfer balances where possible so that you can consolidate your debt onto one card. This allows you to manage your financial liability far more effectively, and develop a greater insight with regards to your exact level of debt.
Embrace Cash and Spend Only What You Can Afford
While credit cards are convenient and allow consumers greater flexibility when they have limited cash flow, they can also encourage individuals to spend money that they cannot necessarily afford. A far better solution to the problem of limited cash flow is to budget your levels of disposable income, and ensure that every penny you spend is accounted for. By also committing to only using cash, you are forcing yourself to think more about expenditure and encouraging better spending behaviour.
Commit to Monthly Repayments That You Can Afford
Another benefit of implementing a strict and exact budget is that it tells you the sum of cash that you have available each month, and this can be allocated to different repayments. So when creditors call to discuss your debt, you are in a position where you can offer them an informed opinion and only commit to a monthly repayment that is manageable. This crucial to maintaining trust with creditors, and building a relationship based on mutual understanding and comprehension.