Avoid temptation after paying off your credit cards
Every year many consumers in the UK decide to get rid of their credit card debts by paying them off in full with the help of a consolidation loan, which is a larger loan that can be used to pay off a number of smaller loans hence leaving the borrower with just one repayment to deal with and often reducing their monthly repayments. Credit cards are notorious for their high rates of interest, as are store cards, which work in much the same way, and consumers are therefore able to save on interest by paying off these debts with a low interest consolidation loan.
However, for many people using a consolidation loan to repay credit and store cards simply makes the problem worse, as they then go on to run up debts on their credit and store cards again, and also have the consolidation loan repayment to deal with on top. Although many people cut up their credit and store cards after paying them off, re-ordering the cards is all too easy, so it won’t take much effort to run up debts on the accounts all over again.
Experts are now stating that consumers need to go a step further and rather than just cutting up their credit and store cards after paying them off they need to contact the card issuers and actually get the cards cancelled altogether. This way they cannot just re-order the card whenever they want, and will have to re-apply from scratch, which could just help them to avoid the temptation of getting their hands on the cards again and re-spending on them.
Consumers are advised, however, to keep just one card on hand just in case of emergencies, but to avoid spending on it unnecessarily. It is advisable to keep a card with a fairly low credit limit, as this can help to ensure that large debts are not run up again.
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