All types of unsecured debts are required to be included within a Scottish Trust Deed and credit cards are the most common type of debt that is included in Trust Deeds and alternatives such as the Debt Arrangement Scheme.
What are Credit Cards?
Credit cards and store cards are both used to purchase goods and services on credit in the same way that a catalogue accrues a debt, or a personal loan, bank overdraft and so on. A debit card is different to a credit card as it relies on finds being active in an account.
Credit cards may be issued by your bank or building society, or other financial services provider. A credit facility may be provided by a high street store for example, more commonly referred to a store card.
Are Credit Cards a problem?
We’re a nation of credit card enthusiasts. The Money Charity reported in July 2020 that the average credit card debt per UK household was £2,238 in January 2020.
Credit cards are convenient and handy. They’re useful for travelling and in some cases, they do offer greater protection for purchases and reclaiming where a transaction has resulted in a poor buying experience.
Chargebacks themselves are really useful. A chargeback is a refund prompted by your card issuer. If you paid for a product or service with a credit card, you can dispute it through the card issuer and let them take the dispute to the merchant. If the issuer succeeds where you failed, the purchase price is refunded to the credit card you charged it on.
However, as credit cards become more readily available, and the numbers of people relying on them continue to grow, defaults are becoming more common.
Store cards carry with them a different level of threat. The store card may seem like its a loyalty card, being used to open with an immediate discount. However, with little room for competitive rates, the interest rates are often unfavourable, to begin with, and comes with the added temptation in the form of buying there and then, in the store.
How to manage Credit Card debt?
If you have a temporary payment problem, contact the card issuer to discuss this. They may offer some short-term flexibility and with payment breaks being replaced with ‘tailored’ solutions as a result of Coronavirus recommendations made by the FCA.
If you haven’t defaulted on your credit cards and have a great credit rating, you can shop around for other credit cards which allow interest-free balance transfers. Caution should be used when examining the small print. Credit card lending is done based on risk. The more of a risk you are, the worse the interest rate you are likely to achieve as a result. Will you be able to afford new lending terms over the longer term.
However, if like many thousands of other households in Scotland, your money issues are more serious, it’s best to get expert debt advice. A qualified money adviser can take a look at your situation, advise you of the options and allow you to make a balanced decision.
Solutions for credit card debts in Scotland may include the Scottish Trust Deed, Debt Arrangement Scheme or Sequestration.
What is a Scottish Trust Deed?
The Scottish Trust Deed is more formerly known as a Protected Trust Deed and is used to consolidate debts over a typical period of 48 months. It’s a government legislated debt solution that allows an individual to freeze interest and charges, pay back a more reasonable amount to their debts and protect assets such as a home or car.
There are disadvantages too such as an impact on your credit rating.
When you have unaffordable debts such as credit card debts, the Scottish Trust Deed solution may work for you.
Alternatives to a Scottish Trust Deed?
The Debt Arrangement Scheme is a solution that also allows you to legally freeze interest and charges, stop creditor harassment over non-payment and gives you a fixed time frame for when you will be able to repay the debt.
When evaluating your options – we recommend speaking to a qualified money advisor and that will allow you to receive tailored advice depending on your circumstances. In addition to the Scottish Trust Deed or DAS, you may consider Bankruptcy as a way of managing your debts. Sequestration and Minimal Asset Process are the two forms of bankruptcy that are used in Scotland, and while they may carry the severest of impacts to a credit rating and come with a natural stigma attached to them – They are an effective way of clearing debt.
Help with Credit Card debts in Scotland
We’ve helped over 20,000 people in Scotland, became the No.1 rated with more Trustpilot debt advice reviews than anyone else in Scotland.
We don’t charge setup fees and every week, our FCA authorised friendly debt team give hundreds of people non-judgemental, confidential and free advice.
Call us on 0141 221 0999 or learn more about Trust Deed Scotland today.