IVA & Debt Consolidation Advice

Managing your debts requires self-discipline and planning. It’s well-known that being overwhelmed with debt can affect your decision making, and in extreme cases your health. The hardest step for many is approaching someone for professional advice. If you’re not ready to make that step yet, then we have listed a few well-known tips for coping with debt problems, but one should always remember, each individual’s circumstances are unique, and these tips for staying out of debt may not suit everyone’s circumstances.

Many believe it’s best to avoid any offers that provide long-term “free” credit, for example, because even though they may be very attractive and tempting, make sure that you read the fine print to look for excessive late payment charges or hidden fees. Store cards may also look attractive as they often give a free gift or let you save money on your first purchase. However, some cards have interest rates of almost 30% APR. If come across an opportunity to transfer an existing balance on either a credit card or a store card to those that have 0% interest on transfers, then you should opt for this, but again, be sure to read the small print carefully, and of course you should shred the old card. GE Money's Transformation Card is one example of a card with 0% interest on transfers at this time.

Some say you should avoid credit card cheques that can be used at retailers where credit cards are not accepted (these cheques are usually sent out with statements). These cheques are sometimes far more expensive than other methods of payment and most retailers accept credit cards these days.
People who have debts on their credit card or store cards could benefit from consolidating their debts into a low-cost unsecured personal loan or a debt consolidation loan. There are many banks that offer loans that are below 6% typical APR. Northern Rock is one such example at the time of writing.

Also, if you frequently use your account overdraft, be careful that your bank has not increased interest rates on authorized overdrafts, as some banks have recently increased rates. Your bank may have even removed the "buffer zone" on current accounts. These buffer zones are used to prevent customers from being charged a fee if there account goes into the red by a small margin.

Finally, use the resources you have available to you such as this publication and advice that can be given by various organizations such as Citizens Advice (citizensadvice.org.uk), the Consumer Credit Counselling Service (cccs.co.uk) and of course free, non-obligatory advice is available from Debtsolver.