It was hardly unexpected but the doubling of the Bank of England interest rate from 0.25% to .5% will have a big impact on Scots’ debt.
Particularly for those who use credit cards since they will be paying much more, says one money expert.
Martin Lewis says that credit card providers are already beginning to reduce the 0% balance transfer periods and borrowing costs also look set to increase.
This will bring to an end to the record length for balance transfers between cards that could see some consumers not incurring interest on an outstanding balance for three years – or more.
Indeed, for anyone living in Scotland and are financially stretched should act now to reduce their credit card debts, he warns.
Banks worry about the amount of debt that is being built-up
One reason for the interest rate hike is the banks’ worry about the amount of debt that is being built-up within the UK as well as increasing inflation.
In a newsletter to followers, Mr Lewis warns that several credit card providers are already increasing their APRs following the bank’s interest rate rise.
They include Halifax, Lloyds and Barclaycard so the amount borrowers will need to repay could rise.
However, another money expert warns in a national newspaper that some providers may be waiting until the New Year before increasing the length of the 0% deals being offered.
That’s because this is when most balance transfers between credit cards take place and it is when most people decide to sort their finances.
Scots wanting to improve their finances
One charitable organisation offers this advice for Scots wanting to improve their finances:
- Check your bank balance regularly
The first step to managing money is to know your spending patterns
- Calculate your budget
Write down your income and then take away things like transport and food, along with other important bills such as rent or mortgage, and this is what you have to spend.
- Pay more off your credit card balance
Anyone with a credit card debt should pay more than the minimum amount required to help bring down their bill.
- Pay an expensive credit card first
For those with more than one credit card debt, then work out which is the most expensive, it’s probably the one with the highest rate of interest, and repay that one first and focus on paying the next most expensive.
- Prioritise debts
Scots in debt may have several creditors but if they cannot afford to repay them all then they need to prioritise their debts. Pay the important ones first including council tax, rent and energy bills, as they have consequences for non-payment.
- Get debt advice
If you struggle to repay debts then you should seek debt advice before these debts get out of hand.
Friendly team of debt advisers at Scotland’s Trust Deed
If you live in Scotland then you can contact the friendly team of debt advisers at Scotland’s Trust Deed to discuss your situation and receive impartial advice, this means you do not have to follow the advice that is given.
The conversations will be confidential and there’s also an online debt test to see what potential solutions are available and in Scotland this may include a trust deed, sequestration or a debt arrangement scheme.
Contact Scotland’s Trust Deed today to find out what help is available and the steps you can take to becoming debt-free.