Debt and stress are connected. When you are in debt, you are more likely to be stressed. And when you are stressed, you are more likely to make poor financial decisions.
The connection between stress and debt is one of the reasons that the Citizens Advice Bureaux in England and Wales deals with 4,495 debt-related problems every working day. To make matters worse, manipulative marketing can lure unwary consumers into a vicious spiral of indebtedness. By educating yourself about debt management options, you can understand the best route out of debt.
Not Paying off your Credit Card
Not paying off your credit card can have serious consequences, especially if you leave it to rack up month after month. First, you’ll be fined by the credit card company itself, and then you’ll be hit by the credit card’s interest fees. The average credit card interest rate in the UK recently hit an all-time high of 21.6% APR, with some credit card retailers charging as much as 50%.
Arguably, the most serious consequence of not paying off your credit card debt is that it will effect your credit score, making it extremely difficult for you to take out other loans, get a mortgage, or buy a car.
Payday loans are small, unsecured, short-term loans. They’re known as payday loans because they are marketed as a way to cover unexpected expenses until payday.
When you take out a payday loan, you’re nearly always facing sky-high interest rates, with some being as high as 7,000%. This can trap you in a cycle of debt where you’re unable to pay off the interest on your original loan. (more…)