Tackle your credit problems

Not looking forward to opening the post? Dreading the Bank Statement

and the bills? Then the odds are that your finances are becoming a problem.

Theres never a better time like the present to tackle a debt problem - as soon as you get that knotted feeling in your stomach, face the problem head on. Heres some good practical advice.

  (mortgage deals)

Save on your Credit card bills
Savings can be found by switching your balances to cards with lower interest rates. Take advantage of the 0% deals on balance transfers such as those offered by Mint - mortgages theyll give you 10 months interest free but with a 2% balance transfer charge. The best transfer free 0% deal without a balance transfer charge comes from Marks and Spencer. Their deal lasts 6 months.

And ensure the interest you pay on any new mortgage quotations purchases is reasonable - better still, now youre cutting back, try not to use your card at all! If you do expect to use your card a bit, then HSBC offers 0% on balance transfers and new purchase for 9 months but again they have a 2% balance transfer charge.

The credit card companies may hate you for it but regularly move your balances between cards to take full advantage of their deals. When youre a month off the end of a deal, start looking for a new card and get the balance transferred.

Cut down your monthly expenditure with a Debt Consolidation Loan (loan)

The purpose of a Debt Consolidation Loan is to take all your existing loans and credit card balances and roll them together into one loan that gives you a single lower monthly payment. This is achieved by reducing the overall rate of interest you pay and spreading the loan repayments over a longer period of time.

But as with everything there are pitfalls to watch out for. When youve transferred the balances to the Debt Consolidation Loan, dont start reusing the old credit lines life insurance youve just paid off. If you do, youll simply end up digging yourself into another hole and make your situation much worse!

And theres another aspect to consider. If youre consolidating into a fairly big loan and youre a homeowner, the lender may want to secure your debt against your home. If this is the case, think carefully. Remember, if you fail to maintain the agreed repayments, the lender can apply to the courts to force you to sell your house. That would not be good news!

Seek help

Theres lots of help available to assist people resolve their debt problem. A good starting point is the Citizens Advice Bureau. Theyve 3,200 branches throughout the UK so the odds are there is one near you. (secured loans)

Then theres the National Debtline. This is a free, confidential and totally independent source of advice. Call them on 0808 808 4000 or visit their web site www.nationaldebtline.co.uk. There you find a free information pack with a personal budget section, debt advice and free fact sheets.

You can also try the Foundation for Credit Counselling. Based in Leeds, its the umbrella charity for the Consumer Credit Counselling Service. Through its free national telephone service and eight centres, CCCS is able to help people with debt problems wherever they live. Their specialist advisory service has already helped thousands of people in the UK by providing counselling on personal budgeting, advice on the wise use of credit and, where appropriate, managing achievable plans to repay debts. Look up their web site at www.cccs.co.uk or call them on 0800 138 1111.

Debt Management Plans

If you have debts exceeding £5,000 spread across three or more creditors, a debt management plan could be something worth considering. But youll need to be able to put aside at least £100 per month to help settle the debts.

Basically, you agree to pay your creditors a single fixed amount each month. A debt management company then receives this sum and allocates it between your creditors. In return, your creditors agree to freeze the money you owe so no more charges or interest pile up.

Some debt management companies charge you a fee for providing this service but others, including the Consumer Credit Counselling Service and the National Debtline, are paid by the creditors. (life assurance)

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