0% help from your credit card company

If you are one of the 40% of people who don't pay off their credit card in full each month, you are being ripped off by your credit card company, as if you didn't already know that!

The Bank of England's Trends in Lending has confirmed that – since the base rate fell to 0.5%, the banks have raised their rates by up to 25%. In 2008 the average credit card rate was 15.5%. Seven years on mortgage rates have falled from 6% to 2% and the average credit card rate as typically gone UP to 18.9%. That is what has happened to credit card rates!

Even more worrying, the Guardian is reporting that nearly all the big banks are charging the same rate – no evidence of competition working there then.

There are lots of “deals” around. You can switch to a 0% card quite easily – and why? Because the bank knows that at the end of the interest free period they will make a mint out you.  That said, as part of a plan to tackle you debt using a 0% card can be helpful.  One of the comparison sites can help you find a good deal. Try Which or MoneySavingExpert or MoneySupermarket for up to date rates.

There is perhaps worse to come, with credit card rates set to rise further when new rules on cross-subsidies arrive later in the year. The important thing is to realise you need to set realistic goals and work towards them.

If you are already having problems with debt, you need to be aware of the interest rate you are paying. “Snowballing” is where you throw every spare penny at the debt with the highest rate, and whilst a good idea in principle this can be hard when you are having to juggle your finances to keep up minimum payments on everything else. It might just be worth getting rid of the smallest debt – just so you can see that you are making progress!

And ask for help!! Zero percent is how much interest your bank has in helping you out here. Never pay for money advice. There is plenty of free debt advice out there – especially from local authority money advisers and places like Citizens Advice Scotland. They can help particularly with budgeting and setting realistic goals for when you can be debt free.