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Debt consolidation - time to check

06/05/2010

People who consolidated their credit card debts at the start of 2009 could well be coming up to the end of their 0% deal, moneysupermarket.com has warned.

During the `peak consolidation rush` last January, the average 0% balance transfer period on offer was 14.6 months, meaning many people who transferred their credit card debts at the start of last year have now started paying interest on their credit card debt once more - or are just about to start doing so.

So, the comparison site warns, it`s time to consider moving the debt to another 0% deal.

According to its calculations, paying 16.9% interest on a £2,000 credit card debt would mean credit card holders `would see their interest increase by £1,456 over the lifetime of the loan, and their debt sentence extend to 19 years and 9 months` - assuming there`s a minimum payment of 2.5% and a balance transfer fee of 3%.

The site does warn, however, that people who`ve switched their debts on multiple occasions may find their options more limited than they expected - and that most of the best deals on offer today are for existing banking customers only.

Kevin Mountford, head of banking at moneysupermarket.com, said: "An interest-free balance transfer card can be a great option for consumers with existing debt who need flexibility. We would always advise consumers that they really need to make some headway in paying off the balance, but for those who have failed to clear their debt in time for the end of their zero per cent period, they should look to swap their debt to another deal before reverting to the cards` typical APR."

A spokesperson for Debt Advisers Direct commented: "For many people with credit card debt, a card transfer can make a lot of sense, giving them an interest-free period in which they can really focus on reducing their debt, without watching a sizeable portion of each payment `disappear` on interest. Anyone who feels they`re not making enough progress on their debt should talk to a debt adviser, who can help them explore their options and find out if there`s a different approach that could help."

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Debt Advisers Direct offer free debt advice and a range of debt solutions, including debt management plans, debt consolidation loans and IVAs (Individual Voluntary Arrangements).

More than 4 million fear they`ll be made redundant 16/12/2010 - According to R3`s quarterly personal debt tracker, more than 4 Consumers took on more mortgage debt in July 26/08/2010 - Consumers took on £2bn more mortgage debt than they repaid Debts called in by parents 26/08/2010 - According to research, `the bank of Mum and Dad` is Teenagers `scared of debt` 19/08/2010 - Nearly two thirds of teenagers are `scared` of debt, according