New credit card tool could help save Brits money
Confused.com is launching a new credit card calculator, which could help Brits save hundreds of pounds on interest and shorten their debt duration, by simply increasing their payments by as little as £5.
According to the BBA (British Bankers' Association),on average Brits have a balance of £1,753 on their credit cards. However, worrying new research by Confused.com reveals that 11% of Brits don't consider their credit card bill as a debt, but rather see their credit card as something that offers them money to spend on. Men in particular believe this to be the case, with 13% holding this view compared to 9% of women.
The figures from price comparison website Confused.com reveal that nearly a quarter of Brits who are in debt on their credit card only pay the minimum off their monthly balance. Most (60%) state that's all they can afford.
So it appears that life's little luxuries may be costing these Brits more than they realise, as 26% of people would rather spend their money on other things than paying the minimum off their credit cards.
In fact, 38% of Brits admitted that they treat themselves to sweets and chocolates on a weekly basis, as well as 22% of people having regular caffeine fixes. On average Brits treat themselves three times a week.
A Starbucks regular-size cappuccino costs £2.15 - that's £6.45 on average a week, £25.80 a month and £335.40 a year that some Brits are paying on their caffeine addiction. Yet if Brits reduced the number of weekly treats they gave themselves and reallocated the funds, they could reduce the length of their credit card debt by at least five years!
In contrast, many Brits do worry about their debts and 64% of people feel their credit card is a debt. Nearly three quarters of Brits are bothered by how long it takes them to pay off their credit card bill.
Confused.com's new credit card calculator could help these worrying Brits, as it demonstrates how people could be saving £250 over the life of the average credit card balance on interest and dramatically reducing the time it takes to clear their debt.
In fact, just by paying £5 more than the minimum payment on a balance of £1,753, Brits could reduce their payment length from over 12 years (146 months) to seven and a half years (90 months) and become debt-free a lot sooner!
Nerys Lewis, Head of Credit Cards at Confused.com says: "Many people currently only make the minimum payments on their credit card. So we've created the credit card calculator to show people how long it will take them to repay the debt if they: continue to make the minimum payment; pay an extra £5 or £10 a month; fix the minimum payment for the length of your credit card balance."
"Using the average UK balance of £1,753, paying an extra £5 a month could save you £250 over the life of the balance, and this figure could increase even further if your credit card has a higher rate of interest than average."
"With our new credit card calculator it's amazing to see that how much people could save themselves, just by putting an extra few pounds over the minimum payments. And we hope that the calculator can help raise awareness of exactly how much you can save."