FALLING foul of a common credit card mistake could mean you're wasting thousands of pounds in unnecessary interest payments.
Consumers are being urged to use their plastic correctly, or risk adding to their debt.
Many people who spend on credit cards are only making the minimum repayment each month.
But making this mistake could prove costly – it will mean you pay more interest on your borrowing and could add YEARS to the amount of time it takes to pay off your debt.
Credit cards can be a sensible way to manage your spending, but experts always advise you clear the balance in full each month.
With most cards, you won't pay any interest on your spending if you do this.
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But if you don't clear the balance, interest is added and the amount you owe starts to grow.
The average UK adult has £1,142 on a credit debt, according to latest figures from The Money Charity.
It says that based on the average credit card interest rate, it would take an incredible 25 years and 4 months to clear the balance if you only made the minimum repayments.
On a typical card, the average repayment on this borrowing would be £57 in the first month – but this would go down slightly each month as the debt gets smaller.
That's because typically the minimum amount you can repay is 1% of what you owe.
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But if you continued to repay £57 a month, you'd reduce the amount of time it took to clear your debt to 5 years and 1 month.
You'd also pay less interest overall because you're making repayments for a shorter period of time.
Sara Williams, founder of debt news website Debt Camel, said: "It takes an astonishingly long time to pay off a credit card this way."
That's because most of your repayment goes towards the interest rather than the amount you owe, she explained.
And as you chip away at the amount you owe each month, your minimum repayment is reduced too.
Sara said: "So your next minimum payment is a little bit less. You might think that's good – but it's a trap.
"You are paying off less of the balance every month, so the time to clear the balance stretches out and you are kept paying interest for longer."
How to clear credit card debt
The ideal way to use a credit card is to clear the balance in full every month.
But in a cost of living crisis, when millions of people are struggling to cope with soaring energy bills, petrol prices and grocery costs, that may not be achievable.
Free online credit card repayment calculators can help you work out how long it will take to clear your balance.
And Sara said that even if you can't clear the full balance, making small overpayments can make a real different.
She said: "Some recent recently published research shows that two thirds of people think they can clear a credit card debt in under five years by paying the minimum.
"But actually the average length of time that takes is over eighteen years.
"You can dramatically cut that by making small overpayments though.
"And if you're trying to clear a card you no longer use, it can be a good idea to set up a fixed payment even if it's only a pound or two more than the minimum."
The impact of interest
For example, if you had £1,500 on a credit card with interest of 18.9%, it would take 21 years and 9 months to clear the balance if you just made the minimum repayment (which would be around £37 at first).
Over that period you'd pay a whopping £1,991 in interest too – more than you'd borrowed in the first place, essentially doubling your debt.
If instead you paid off £50 a month, you'd clear the balance in 3 years and 4 months – your interest payments would total £485 over that time.
And if you paid £100 off a month, you'd clear the balance in just 1 year and 6 months – and you'd pay just £204 in interest.
Sara said: "Some credit cards let you set a monthly payment at an amount and will automatically take that by direct debit.
"If you get paid monthly, it could be good to pay the credit card as soon as you're paid, so the money is never in your acount and you can't spend it by accident."
Other tips include switching to a credit card with a lower interest rate.
Some cards will charge 0% interest for a set period, which can give you some breathing space to get on top of your finances.
And if you're struggling with repayments or debt then some organisations may be able to offer free advice.
Citizens Advice has a really useful debt help page packed with more information.
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StepChange's web app gives free, confidential expert debt advice.
You can contact National Debtline online or by calling 0808 808 4000 between 9am and 8pm Monday to Friday, and 9.30am to 1pm on Saturdays.
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