Tackling your debts

Can you get interest frozen on your credit card?

Posted 28 June 2016

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Looking to stop interest building up on your debt? Here’s how you could do this.

When you’re finding it hard to keep on top of your debts, dealing with interest and extra charges can make it even worse. After all, if you’re already struggling with what you owe, you won’t find it any easier to pay it off if the amount is increasing.

But if you’ve got credit card debt, can you cut the cost of this? Can you get the interest frozen on your credit card? Let’s take a look at your options for making credit card debt cheaper and what you can do when you’re really finding it hard to cope.

Struggling with debt repayments

There are a number of reasons why you might find yourself struggling with your credit card payments. Maybe you’ve lost your job or you’ve taken on more borrowing than you can manage. You might have found that your household expenses suddenly started costing you more – meaning you’ve got less each month to put towards your repayments.

No matter what the reason, you should always make sure you can afford your repayments before you take any form of credit out. This will help make sure that you don’t end up in any difficulties with debt. But if you’re already starting to have problems with repayments, don’t panic – you can make this more affordable.

Moving your debt

If you’ve only just started finding it difficult to afford your credit card payments, you might be able to move it to a cheaper deal. For example, if you had a good history of repaying your debts on time but you had an emergency bill to pay, you might not be able to pay anything towards your credit card debt. In this instance, you could move it to a balance transfer card.

Balance transfer credit cards typically have a 0% interest rate for a set period of time. This can be as long as 36 months and during this time, you won’t pay any interest on what you borrow. A card like this can really help if you’re just finding your current credit card too expensive as it will make your debt more affordable.

There’s generally a fee of around 3% to transfer your balance onto one of these cards. This means that if you owe £1,000 and you move it to a balance transfer card, you’ll have to pay a fee of £30. If you’re planning to transfer a large balance, make sure you check how much the charge will be – it might end up working out more expensive.

But if you’ve already missed some payments, you may not be able to get accepted for a balance transfer card. This is because they’re generally only for those with the best history of managing credit. Missed payments and defaults will appear on your credit history and if you tried to apply for a balance transfer card, you might find yourself turned down.

Speak to your lender

If you’ve already started to fall behind on your credit card repayments, the best thing to do is to get in touch with your lender. Let them know you’re having difficulty with your debt and they may agree to freeze your interest and charges for a short period whilst you get back on your feet financially.

They’re more likely to do this if you show them you’re repaying everything you can afford. Show them your budget including what you’ve got coming in and all of your essential bills and expenses. Let them know that if they froze your interest for a set period of time, it could really help to clear your debt. Your lender doesn’t have to do this, but they’re more likely to be willing to help if you get in touch with them early and explain your situation.

Possible solutions

But if you’ve missed payments and defaulted, you might not feel up to speaking to your lenders on your own. You might be worried that they’ll turn down your request to freeze your interest or even worse, that they’ll start debt collection against you. 

Don’t worry, you don’t have to speak to your lenders alone – you can get help with this. You could speak to a debt advisor by using one of the options on the left and they’ll be able to explain the next steps.

If the debt advisor thinks you won’t be able to afford to repay what you owe even if your lender does agree to freeze your interest, they might suggest a debt solution will be better for you instead. This will have an effect on your credit history for six years but it could help you repay what you owe or clear your debts. And with certain debt solutions lenders are legally bound not to add any more interest and charges to what you owe, so long as you stick to the terms of the debt solution. Remember, a debt advisor will only recommend a debt solution when the positives outweigh the negatives. And whatever happens, there’s always a way out of problem debt.

You can also get free and impartial advice from the Money Advice Service.

by Christine Walsh

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.