Credit card holders warned to 'pay more than the minimum'
25th June 2008
As the credit crunch hits consumers hard many will be tempted to reach for their credit cards to help fill the financial gap but experts have warned to ensure people are wise with their repayments.
Independent financial advice site, Moneyfacts.co.uk, has said as credit cards help families to pay for family holidays, days out or shopping, only paying the minimum amount each month could be dangerous.
Michelle Slade, analyst at Moneyfacts.co.uk, explained the potential pitfalls: "If only the minimum repayment is paid each month, many could find themselves paying more than twice as much for their purchases."
She continued: "If you spent £3,000 on a credit card charging 15.9 per cent APR and repaid the minimum of 2.5 per cent, min £3, you would end up paying an additional £2,729.16 in interest."
Although it is tempting to just pay the minimum amount on a card, the advice site has warned consumers that it will just "add debt in the future".
Many credit cards are available with zero percent on purchases for a set period of time, which can be up to 12 months, but even with these cards, Moneyfacts.co.uk advise it is best to pay more than the minimum.
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