Expert view: the long game

Matt Sanders, money expert
Propogation-mad money expert Matt Sanders, yesterday
"Just like careful cultivation can help your garden flourish, care and attention can help you manage your finances"
  • | by Matthew Sanders

There’s still frost on the ground but, as the evenings draw out, it looks like winter is finally on the wane.

If, like me, you’re of a green-fingered disposition, you’ll already have one eye on the summer and the bumper harvest it’ll hopefully bring.

I’ve already spent many afternoons this year merrily propagating away in the greenhouse with a big grin on my face, pleased as punch that, come autumn time, I’ll have a glorious glut of aubergines, squashes and French beans – ooh la la! – to feast upon.

Vegetable cultivation is a long game, and it takes some meticulous planning and foresight – just like most things when it comes to money.

So, you’ll imagine how taken aback I was at some news from the Debt Advisory Centre I noticed while perusing the financial pages over my morning muesli this week.

The advisory service posed this seemingly easy multiple-choice question to 1,800 people…

“If you had a £1,000 balance on a typical credit card with an 18.9% APR, and paid a minimum monthly payment of 2.5% or £15, how long would it take you to pay off?”

(a) 5 years, (b) 9 years, (c) 19 years, (d) 29 years, (e) I don’t know

Astoundingly, 80% of people surveyed weren’t able to give the correct answer of nine years, and almost a quarter believed it would take between 19 and 29 years to repay the balance in full.

A fifth were more hopeful that it would take just five years to clear the balance. ‘I don’t know’ received the largest number of responses, with 38%.

Just like careful cultivation can help your garden flourish, care and attention can help you manage your finances.

 Image of fruit and veg

Image: Wikipedia Commons

Think of your credit card debt as a pesky weed – it can be an easy enough problem to manage, but without due attention it can quickly grow out of control, sucking vital financial nutrients from your bank account.

So, to keep your credit card debt under control, follow these easy steps.

1. Try an online tool to see how long it will take you to repay your existing credit card balance.

2. Once you’ve looked at this, think about increasing your monthly payments so you clear as much as you can afford every month to minimise the amount of interest added to your debt.

Remember, just paying the minimum amount every month could leave you battling the balance for years to come.

3. Whatever you do, don’t make a late or missed payment. If you’re having serious trouble making a payment or know it’ll be late, call your credit card provider to let them know in advance. The best possible way to avoid a late payment is paying by direct debit.

Late payments can mean expensive penalties and damage to your credit rating, making it harder to obtain credit later on.

4. Investigate switching your balance to a 0% balance transfer card. This could help you clear the debt faster, and seriously reduce your monthly repayments. Just make sure that the balance transfer fee doesn’t outweigh the savings on monthly repayments.

5. If you can’t even make your minimum monthly repayments, then seek out debt advice, from an independent organisation such as the Money Advice Service.

Just like weeds will spiral out of control if you ignore your garden, ignoring your debt will make it much worse, as your lender will continue to pile on interest and penalty charges…

So, with that, I’m off to wait patiently for the risk of frost to subside. Happy gardening!

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