12 May 2005
Consumers in the UK choosing to pay typical minimum monthly repayments (MMR) on their credit cards are running the risk of facing a 'debt sentence' of more than 27 years, according to latest research.
The figure, which can be expected by credit card holders who pay only the MMR on a typical credit card balance of £2,100, has caused anew concern amongst industry experts and consumers alike.
At a standard APR of 14.9 per cent and paying the two per cent minimum requirement, a borrower with this balance could take 27 years and five months to pay off the debt - along with £2,719.18 in interest.
The report did reveal however that if the same borrower increased monthly repayments to just five per cent, the repayment time could be drastically reduced to eight years and four months, saving £2,096 in interest.
"They say that nothing ever comes for free; a statement true within the credit card world of seemingly free money," a leading economist commented.
"Where possible, clear the balance outstanding to minimise the interest charges incurred, or consider transferring the balance to one of over 150 credit cards that offer zero per cent APR for an introductory period."
Which is the right credit card for you? Find out now by comparing cards with uSwitch.com's free and impartial comparison service.
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