Latest Debt News
Minimum payments "keep credit card users in debt"
18/10/2005 15:20:00
Those who make only minimum repayments on their credit card debts could find themselves paying over twice the amount that they originally borrowed.
The non-profit financial advisers Myvesta UK said that many believe their financial situation is secure if they can meet the minimum repayments due to a credit card balance. However, the company said that the repayment was designed to maximise the lender's profits and not get the borrower out of their balance.
Myvesta suggested that a £2,000 debt, paid back at only the minimum rate, would take 18 years to clear and would cost the borrower £2,615.43 in interest.
"By only paying the minimums each month you will spread your debt repayment out for many years and pay thousands more in interest," said Steve Rhode, chairman of Myvesta UK.
"When stuck barely paying the minimum it's just a matter of time before one unexpected expense will force a person to fall behind. Then late fees and higher interest costs will only compound the problem."
Myvesta UK offers a range of services to help those knee-deep in debt to recover. The not-for profit company was established by Steve Rhode, after he himself became bankrupt in 1990.
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