Debts & Loans

The credit crunch is hitting some people so badly they're using their credit card to pay off their mortgage.

That is the evidence gathered by Citizens Advice, which says that debt is the Number One issue in its bureaux across the country with 1.7 million new cases a year.

"We've seen lenders very willing to make credit cards available but not quite so understanding when things have gone wrong," said the organisation's Moira Haynes.

"Credit card debt dominates our caseload. It's a major problem for our clients."

Here are ten top tips from Citizens Advice on how to deal with credit card debt

1. Don't panic! But don't ignore the problem, it won't go away.

2. Don't take out more credit or put more on your credit cards - you'll only get yourself in worse trouble. And don't use your credit card to take out cash or pay your mortgage - this will only push you deeper into debt.

3. Talk to your creditors and let them know you are having problems.



4. Don't just pay the person shouting loudest - who may be your credit card provider. Make sure you keep up your most important regular payments like mortgage/rent, council tax, gas and electricity before tackling your credit card debt. Otherwise you will be in danger of losing your home, having your gas and electricity cut off; or ending up in court and even possibly prison.

5. Check your income and investigate whether there's any extra help you are entitled to that you're not getting, such as tax credits.

The problem with the heavy-handed approach is that while there are some people who won't pay there are many who simply can't.

6. Look carefully at your spending and see if there is anything you are able to cut down on, but don't be over- ambitious or you won't stick to it. If you have recently lost your job or are unable to work, check for any payment protection insurance (PPI) you may have taken out and whether you can make a claim.

7. Work out exactly how much you have coming in and going out, and how much you can realistically afford each month to pay off your credit card debt.

8. Think twice about taking out a loan to pay off all your debts. You may end up paying back a lot more than you borrowed and at very high interest rates; you may not be able to afford the repayments; and the loan may be secured against your home which you could then lose.



9. Don't pay for advice. Your local Citizens Advice Bureau offers free, independent and confidential advice. They will help you work out repayments and negotiate with all your creditors, and also help you keep out of debt in the future.

10: Read the small print! A 0% offer on balance transfers may not apply on your new purchases using the card.