It started with a store card...

We reveal how easy it is to lose control of your finances...

You see a must-have bargain in the sales. Your purchase is already an amazing bargain, but you could get a further 10% off the price if you sign up for the store’s card.

On the face of it, this is certainly a good deal if you pay off the debt at the end of the month. But how many of us actually do?

Only paying the minimum amount each month

You start to pay the minimum payment each month. In the meantime, you need a new outfit for cousin Mary’s wedding. You have no spare cash, and you want something special, so you use the store card again. Before long, the card is at its limit.

You continue paying the minimum amount each month. It’s only 5% of the balance each month and easy to afford. The problem is, with the high rates of interest the card is charging you (rates are often as high as 30%), it could take forever to repay. You are only paying back the interest and very little capital. Your initial bargain is now turning out to be extremely expensive.

It’s not long before you’ve managed to get a credit card as well. It has a much higher credit limit and a very high interest rate. But you don’t intend to use it much and you promise yourself to only use it for emergencies.

However, there are several repairs that need doing to the house, so this money has come at a really good time. The local DIY store has a sale on so it’s an ideal time to buy.

Before long, the credit card is also at its limit.

Alarm bells

Then you receive a letter from the credit card company.

It’s great news! Because you are such a valued customer, they’re going to increase your credit limit. In fact, they will double the amount. On top of this, they are offering you a free overdraft facility at the bank.

Alarm bells start to go off in your head. You really shouldn’t take out more credit but you start to think of reasons why it’s OK to accept it. You could always use your annual bonus from work to pay it off. Besides, the extra money will come in useful for the holiday you’re planning.

After a month, the bank starts to send out blank cheques you can use for emergencies. Money’s getting a bit tight so you use these to pay some of the bills. There’s a charge each time you use them and you notice these are starting to add up on your credit card statement.

(As an aside it’s interesting to note that according to Credit Action, Britain's interest repayments on personal debt were £65.1bn over the last 12 months and the average interest paid by each household on their debt is approximately £2,582 each year. Just imagine what you could buy with this amount of money.)

Resort to a consolidation loan

You now have a store and a credit card at their limit. The overdraft at the bank is also nearing its limit.

You consider getting a consolidation loan. This means you could pay off all the debts and just have one easy reduced payment. You could also get a bit extra to pay towards a second hand car, as the old banger you have is in need of replacing.

The loan is agreed. But you don’t use it to pay off your existing debt.

You decide to go for a brand new car and a new TV. You feel guilty but you tell yourself you deserve it. You work hard to earn your money. Besides, you’ll pay it off soon.

But you don’t.

Struggling to pay the minimum amount on your debt each month can mean you will be paying back the debt for years.

You now have a loan, a credit card, a store card and an overdraft. Your debt situation is now seriously getting out of hand. You are finding you don’t have enough money to pay for food and priorities.

Panic sets in. Loss of job or illness at this stage could mean financial ruin.

You need help…

It’s so easy to get into this downward spiral of debt

If you have found yourself in this situation, you’re not alone. The average household debt in the UK is £8,495 (excluding mortgages) and this figure increases to £16,336 if the average is based on the number of households who actually have some form of unsecured loan.

It’s not too late to take control

If you feel that you are constantly struggling to meet repayments on your debts and you are using credit to live on, you can get debt help from CCCS. Alternatively speak to one of our counsellors on 0800 138 1111

Did debt creep up on you? We’d love to hear your story.