Did your credit cards take a hammering over Christmas? Are they reaching crisis point, with no credit left and repayments soaring?

Then debt consolidation might be the answer…

It’s reckoned that in Britain, people owe a total of £72.5bn on credit cards – £400m of which was added in November. That works out at around £2,688 per household of unpaid credit card debt.

Credit cards are wonderful things, enabling us to buy things we want or need and spread the payments over a period of time.

But sometimes they can cause us problems, if we have too many cards, for example, or start seeing the repayments grow so much that we can’t afford them. Interest rates on repayments can be high and debts can spiral out of control.

If this Christmas has just about pushed you over the edge, then debt consolidation might be the solution.

If you have a mortgage, you can add your credit card debt to that loan and then pay it off as you pay off your mortgage. That way, you clear off your high interest credit card debt and give yourself a more manageable repayment time.

The interest you pay on your mortgage repayments will be far lower than your credit card bill, so you can save yourself a lot of money and stop the credit card companies chasing you.

Of course there are things to consider.

Adding the credit card debt to the mortgage means you are paying interest on this debt for probably longer than you would if you just paid the credit card off monthly.

Also, remortgaging might involve a fee, but even so it will most likely be cheaper than continuing to pay high credit card interest.

Credit cards tend to be in sole names so if you add these debts into your joint mortgage then they become joint debts.

Another point is that you are turning unsecured debt into secured debt by adding it to your mortgage.

If you can’t remortgage – because you are in the middle of a fixed-rate deal, for example, – you can always take out what is called a second charge loan to run alongside your existing mortgage. Then when your existing deal comes to an end, you can look at consolidating all the debts into one remortgage, with just one monthly payment and probably saving money each month.

Debt consolidation and remortgaging can be complex and it is important to get advice before going down this route.

For a free, no obligation discussion on this or any other mortgage or insurance-related issue, please give me a call on 01723 384558 or 07767 692 653 or email me at mgrayshan@googlemail.com

And don’t forget you can still contact me to book a free slot for a New Year financial health check…