Debt can seem like an overwhelming burden, and some people’s problems with debt have grown much bigger over the past year.
A recent survey by VoucherCodes.co.uk found on average, the 25-34-year-olds they polled had worked up £2,673-worth of debt since the pandemic lockdowns started.
Rachel Springall, a finance expert at Moneyfacts.co.uk, says some people who are struggling may want to approach a free debt advice service for support, before their situation gets worse. In the meantime, here are some tips from Springall to help people make a start on bringing debts under control:
1. Use budgeting apps
Springall says: “Thankfully there are free mobile apps that can break everything down and help consumers to change their spending habits.”
2. Consider low or fee-free balance transfer cards
“Consumers comparing 0% introductory balance transfer credit cards may well be comparing the deals with the longest interest-free term, however there are also fee-free options to consider,” says Springall.
“In recent months, some providers have dropped their fees, which means borrowers could save on the up-front cost of moving their debts.”
3. A low-cost loan could help consolidate debts
Springall says rates as low as 3.4% have recently been offered to people looking to borrow £5,000 over three years. Bear in mind though that you may not be offered the advertised rate – and always think very carefully and perhaps seek advice before taking on additional debt.
Springall adds: “It’s important to keep in mind that out of all successful applicants, a minimum of 51% are offered the advertised rate, and that early repayment charges may apply if customers do switch their loan.”
4. Get out of expensive overdrafts
Depending on who you bank with, overdrafts can be a very expensive way to borrow. Springall suggests: “An alternative to clear an overdraft would be to use a money transfer card and this may be more suitable for consumers concerned they will be unable to get back into the black quickly.”
5. Build a savings buffer so you can avoid debts in future
Springall says the West Bromwich Building Society has been offering an adult regular saver account paying 2% interest. NatWest has also been offering a digital regular saver account paying 3% on balances up to £1,000, to its current account customers.
Credit score firm ClearScore also suggests breaking debts down in order of priority and speaking to your lender as soon as you can if your situation is getting worse.
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