According to the latest inflation figures from the ONS, the consumer price index (CPI) rose by 6.2% in the 12 months to February, from 5.5% in January . It should continue to rise, which should be confirmed in the next CPI report, which will be published on April 13.
Low-income households are feeling the pressure, leading to increased borrowing to make ends meet. Experts warn that the longer people continue to borrow from expensive forms of lending, the more likely they are to drown in debt as repayments come due. Here’s what you need to know.
How much has credit card borrowing increased?
Bank of England data shows a £1.5bn jump in credit card borrowing in February to £59.5bn. In fact, the rise pushed the annual growth rate of credit (including other forms of borrowing, such as car dealer financing and personal loans) to £199.5 billion.
Due to the cost of living crisis, the next Bank of England Money and Credit Report on May 4, 2022 is expected to show a further rise.
How to avoid drowning in credit card debt?
When times are tough, debt can be hard to avoid. Here are three tips to help you manage the credit card debt you have.
1. Compare and choose your credit cards wisely
It is essential to understand how credit cards work and to correctly calculate credit card interest and fees. This way you can compare different credit cards and offers and choose the right credit card for your individual needs.
You can apply for more than one credit card if you qualify. This is worth considering as different credit cards may be better suited to specific circumstances. For example, a travel credit card might be better when you’re on vacation because it helps you avoid high transaction fees abroad.
The Motley Fool has listed the top rated credit cards ideal for different circumstances. Compare them to make sure you’re on the most suitable offer. And if your current credit card is too expensive, you can always consider a 0% balance transfer credit card to help ease your financial pressures.
2. Reduce your expenses
Review your expenses to identify anything you can give up, even for a short time. Of course, you can’t do without the essentials, which will undoubtedly mean trying to do without the luxuries. You might consider turning to cheaper stores for your essentials or switching to more affordable utility providers – although options for the latter are understandably limited at the moment.
Also check if you are entitled to a government benefits. They could help you reduce your expenses, allowing you to use the money saved to pay off your debts faster.
3. Increase your income
If you have some spare time, the easiest way to do this is to start a side hustle. The extra income can go a long way to helping you pay off debt faster and build financial resilience, especially in times like these when inflation is high. The following articles might give you a head start in your quest to find the perfect side hustle for you:
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