Personal Loans

Secured Loans

Other Loan Types

Residential Mortgages

Buy to Let Mortgages

Other Mortgage Types

Mortgage Payment Protection

Life Insurance

Other Finance

Managing Debt

Not all debt is bad

It is important to realise what debt you have that is bad for your finances, and what can actually be good for you. A mortgage is an example of a good form of debt, it is secured against the property and so you have an asset that is worth at least what the debt is (unless you are in negative equity), and your house will generally rise in value putting you in an even better position. If the worst comes to the worst and you can no longer afford the repayments, the house can be sold to clear the debt and will often leave you with some money in your pocket.

Debt that you have planned for is also not necessarily a bad thing, if you need to make a purchase and but do not have the funds available then a short term loan can be invaluable, as long as you are aware of the interest costs and budget accordingly to repay the loan.

Falling into debt that you have not planned for is where the problems can begin, and it can be difficult to back in control rather than falling deeper into debt. There are strategies that you can use to help, we have outlined the main ones for you below.

Clearing your unwanted debts

Credit card debts are perhaps the easiest to get into, and with their high rates of interest they can be the hardest to clear. Prevention is of course better than cure, and it is advised that you do not put debts on your credit card that you cannot clear within three months – remember they are a convenience and short-term option, and as such they carry the premium of high interest rates.

If possible, you should look to transfer your debt to a different credit card (known as a balance transfer) to benefit from a lower introductory rate, or even a zero percent deal. During this reduced rate period you should pay off as much of the balance as you can, to reduce the overall amount of interest you are charged. If you have debts on a number of cards then you should prioritise those that have the highest interest rates and aim to clear those debts first.

Alternatively to the above approach, and a good option for clearing other small to medium loans, is to take out a debt consolidation loan. At this stage taking out another loan may seem like the last thing you should be doing, however this will be one that is correctly planned for and which will help to get your debts under control. A debt consolidation loan can help in one or all of three ways, firstly it will usually be at a lower interest rate and so reduce the cost of your debts, secondly it will replace all your repayments with one making things more manageable, and thirdly it can be over a longer term so reducing the amount you pay each month.