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Reduce and clean up your debt before Christmas (just in case you need to borrow over the Christmas period!)

The average debt per household including mortgages is now £62,670 and credit card debt is £1,067 per adult and this will increase over the Christmas period as people pay for presents and luxuries.

To get prepared for this and to maintain and manage your debt properly here are my five top tips:

1.Interest Rates

Most experts now think that an interest rate rise is likely to be coming soon so look at your debt now before that happens and start with your biggest debt first – and that’s likely to be your mortgage.

It is possible at the moment to re-mortgage and lock in interest rates of less than 1% for a 2 year fixed mortgage deal and about 2% for a 5 year deal. There will be fees but it may still be worth the savings on your existing mortgage. Ask your current provider first for any better deals (likely to be a cheaper switch) and ask for fees to be added to the mortgage so you don’t have to pay them now.

Look on the internet for comparisons and to calculate the specific savings and costs of switching.

2. Credit Cards

There are a large number of credit card deals offering 0% at the moment for up to about 2 years.

Examples are: Tesco Bank (23 months 0%): M&S (22 months 0%) Sainburys (22 months) and HSBC (18 months+ £25 cashback). If you have poor credit (see below) then Marbles has a 6 month 0% card on offer.

3. General Debt (Credit Report/Score/File)

The worse your credit file then the more interest you will pay, so work on that and it will reduce the amount of interest you’re charged.

Go onto a credit refencing agency like checkmyfile.com and check and correct:

a. Name (watch spouse/siblings!). use the same name every time with every financial application
b. Address (issue the format on the electoral roll)
c. Date of birth (be truthful!)
d. Existing debt – want all your real debt included but none of somebody elses!
e. Disputes, or false info. Find these and report them to the referencing agency
f. PAY MINIMUM amount off on time every month without fail!

4. Help with Debt

If you are in debt there are many places to go for help: debt help lines; credit card providers; citizens advice – put in debt help in a search engine and loads will pop up. Also, take a look at the National Debtline.

5. Know What Debt You’ve Got

Make a list of the amount, the interest and payment dates and then deal with or bust the most expensive debt first – and that’s the highest interest rate not the biggest balance. Gradually eliminate one debt after another

Gill Fielding

Author Gill Fielding

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