Credit card companies have largely escaped the criticism heaped on the likes of payday lenders for fuelling Britain's debt problem. But they are just as culpable and predatory as the short-term lenders.
Think about the 0 per cent deals they offer. You can now get a "grace period" of almost three years, during which you need pay no interest on your balance. If you think that sounds great, you need to think again.
It's simply a trick to keep you in debt. Why? For starters you'll be charged a fee when you transfer a balance to a 0 per cent deal. Typically it's around 3 per cent.
Doesn't sound much? On a £5,000 balance that's an upfront fee of £150. And then you'll pay at the end when you're switched to a high-interest charge – around 19 per cent at the moment – once the 0 per cent deal is over.
And if you think you're clever enough to avoid those higher interest charges by switching to another 0 per cent deal, you'll find yourself slapped with another £150 transfer charge.
The truth is that credit card companies are being a little bit clever with these long-term deals. They want you to take them because many borrowers look at the months or years that they have to repay the debt and think that there's no need to hurry.
But delaying repaying what's owed can turn into a long-term debt problem, as many never get round to clearing the debt at all. In the meantime that little plastic card is a constant temptation to push yourself deeper into the red.
This week the City watchdog – the Financial Conduct Authority – published a number of concerns about credit cards and gave the industry until the beginning of January to respond.
Don't wait for its inevitably damning report. Rip up your credit card now to take away the temptation that will get you further into debt. Sure, there are plenty of you who have a card for convenience and actually make money by using plastic that pays cashback or gives discounts.
But for everyone else, my advice is to say no to easy credit and yes to being debt-free.
I made a video this week explaining the credit card problem and what you should do about it. You can watch it at ind.pn/15E5Uhz.
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