Get smart with short-term debt

Before you borrow

Debt in itself doesn’t have to be a bad thing. We often pay for some of the most important things in our lives, such as a home, a wedding or a car, through one form of loan or another. But before you borrow, ask yourself these questions...

Is this an important purchase?

This doesn’t necessarily mean limiting yourself to essentials only. Some non-essentials will improve your quality of life. It’s up to you to decide whether the item is worth the cost. Either way, it’s a decision worth taking time over, not one to make on impulse. 

How much will the monthly payments be?

A big question. It determines how much the debt will affect your everyday life. How much will it add to your monthly bill? Make sure that you know what the repayment terms are before you take the debt on.

Can you afford the repayments?

If no, then it’s time to look for an alternative. You should also consider how changes in your circumstances
might affect your ability to make repayments.

Will the loan be tailored to your needs?

Consider how different types of loan will fit your needs. For example, some credit cards may offer 0% on balance transfers while others might offer cashback on purchases.
 

 

Cutting your credit card debt

Credit card debt among the over-55s has reached a six-year high*. If this includes you, here are six ways to help tackle their potential burden.
 

1. Make sure you're getting the best deal - if you've had your card a while then the interest rate may have increased. There are a lot of 0% deals available to switch to.

2. Pay off the most expensive debt first.  

3. Track your spending and identify areas where savings can be made.

4. Be clear on what debts are owed and track their progress as you pay them off. Look into alternative options that offer lower interest rates.

5. Set reminders to ensure no late repayment fees are incurred.

6. Maximise credit card repayments to reduce sky-high interest and pay off debts more quickly.

7. Reduce your credit limit to minimise potential debt and stop relying on buy now pay later.

8. Budget your spending. Be strict about items that may not be necessary.

*Aviva Real Retirement Report 2017

 

Debt helplines 

If short-term debt has become a cause of concern, consider seeking expert help.

Call your local Citizen's Advice or visit citizensadvice.org.uk

Money Advice Service: 0808 138 7777

Payplan offers fee-free debt management plans: 0808 250 3822

Getting all the help you're entitled to? Speak to the National Debtline on 0808 808 4000 or visit nationaldebtline.org