Financial solutions company Think Money says that people could prevent unexpected charges for missed credit card and other debt repayments by setting up a monthly Direct Debit or standing order.
Financial solutions company Think Money (http://www.thinkmoney.com/) says that people could prevent unexpected charges for missed credit card and other debt repayments by setting up a monthly Direct Debit or standing order.
But the company added that this should be a part of a wider budgeting plan - and anyone unsure about how to put their own budget plan together should seek advice from an expert.
According to Michelle Whiteman of the UK Cards Association, more than 60% of people with a credit card pay off the balance in full each month, meaning they pay no interest. But not everyone does this, and Ms Whiteman said that cardholders should set up a Direct Debit to ensure at least the minimum payment is made.
A budgeting expert at Think Money said:
"Budgeting should be a central part of anyone's finances. It ensures enough money is put aside for essential costs such as mortgage/rent payments, bills and debt repayments, leaving the individual with an amount they know is safe to spend.
"Setting up standing orders and Direct Debits can make this process easier, because it means bills are charged automatically. Not only that, but on energy bills and other utilities, providers often charge less to customers who pay by Direct Debit - so it makes good financial sense, too.
"However, this alone may not be enough. Direct Debits on things like credit cards often only cover the minimum payment, and making only the minimum payment will mean the debt takes a long time to pay off.
"Furthermore, without proper planning, billpayers risk accidentally spending money needed for bills, meaning their Direct Debits could take them overdrawn. A proper budget is necessary to ensure that everything is covered.
"At a time when more and more people are seeking professional help - for example, in the form of debt solutions such as debt management plans and IVAs [Individual Voluntary Arrangement] - budgeting is especially important. But anyone who finds they still struggle despite keeping a tight budget should seek expert advice as soon as they can."
Notes to Editors
Think Money is one of the UK's leading financial solutions providers, delivering a comprehensive range of financial solutions, including loan, insurance and banking solutions.
Think Money defines its mission as 'To educate, rehabilitate and advise on all aspects of financial management'.
For more information, visit the Think Money website at http://www.thinkmoney.com/.
Think Money debt management section: http://www.thinkmoney.com/debt/debt-management/
Debt consolidation calculator: http://www.thinkmoney.com/debt/debt-consolidation/calculator/