The dangers of credit card debt
Credit card debt is one of the most common causes of stress for people all over the UK, as it can lead to a great deal of financial strife. If you don’t keep on top of your monthly credit card payments, your debt can spiral out of control and can become extremely difficult to dig your way out of – but a debt consolidation loan for credit card debt could help. The dangers of credit card debt include:
Damaged credit score
Having excessive credit card debt will significantly decrease your credit score. Your credit utilisation ratio (how much debt you have accumulated on your credit cards versus how much credit you have available) impacts 30% per cent of your credit score. The higher your credit utilisation ratio is, the higher the likelihood that your overall credit score will be harmed. If your credit score is too low, it will prevent you from being able to qualify for new credit card loans.
It can leave you unprotected from unexpected expenses
Life is full of surprises, which is why having plenty of savings is vital to ensuring that you are protected from any unexpected costs that might occur during your lifetime. If an unexpected cost suddenly appears, such as your car breaking down or your boiler malfunctioning, you should be able to pay for it with cash from your savings. It’s a good idea to have between six and twelve months worth of expenses in your savings account for you to rely on in times of need, but excessive credit card debt can leave you vulnerable if an unavoidable expense suddenly appears.
High interest rates
One of the biggest problems with looming credit card debt is the high interest rates that come with it. Many credit card companies are known to charge over 20% in interest rates, which can quickly escalate and become difficult to control if you don’t keep up with your monthly payments. Many credit card users make the mistake of only paying the minimum monthly amount required, which can make it difficult to pay off your resulting balance.
If you’re a homeowner and are wondering how debt consolidation loans can help you take control of your credit card debt, get in touch with our friendly team at Debt Consolidation Loans today.