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Lifetime of debt from minimum repayments

07/10/2010

Borrowers could be paying off credit card debt for years to come, if they choose to just make the minimum repayments on what they owe.

Research from Moneysupermarket.com found that one in ten people with credit card debt – around three million people – choose to live this way.

The average length of time it takes Britons to pay off the debt that they owe to credit card companies is close to two years (21 months).

Kevin Mountford from the website warns that "paying back the minimum amount each month will dramatically increase the total amount they pay back in the long run".

For example, building up £1,000 of debt at 18 per cent APR would take 17 years to pay off, and the total interest would mean that the card owner would pay off double the amount they originally borrowed.

Kevin Still, Director of Atlantic Financial Management says: "Many UK consumers have accumulated significant levels of personal debt on credit cards on multiple cards, often switching balances from one card to another and then using the spare capacity on the old card. The debt spiral then gets to a point that you can only afford the minimum payments or you start missing monthly payments on one or more card. Managed debt solutions, like an IVA or a Debt Management Plan (DMP), can mean that interest & charges are frozen and that the balance is cleared faster and at a rate that you can afford provided that you stick to the repayment arrangement." ADNFCR-2613-ID-19943947-ADNFCR