Part of: Finance World

I signed up for a credit card when I was 18 and had almost maxed the limit by my 19th birthday. The interest rate was 11.9% so my minimum payments each month were mostly taken up by interest instead of paying off any balance! After speaking to my friends I decided to transfer the balance to a new card that had a 0% offer on balance transfers so I could pay off the outstanding money instead of all this interest. 

I shopped around for the best offer, opened a new credit card and transferred all of my outstanding balance before closing my old card account. I had planned to pay off as much as I could each month and not spend on the card so that I could pay the debt off quickly.

I managed to stick to my plan for about three months, but then with Christmas fast approaching I decided to use my card to buy a couple of small things. I'd been really good up until this point and since these were Christmas gifts I didn't see the harm. My spending didn't stop there though and before I knew it I got my monthly statement telling me that I had exceeded my credit limit by £15 and that because of this they were taking away my introductory 0% interest offer. Now I couldn't use my card until I was back within my limit and I had to pay interest at 12.9%, instead of 0%, on my outstanding balance.

After six months of really careful budgeting I have just about managed to clear most of the balance and have not used the card again. I hope to have it all paid off by Christmas this year but I won't be making the same mistake as last year. Spending on credit is only a good idea if you know you can pay it back quickly, so I won't be using my card again until I trust myself to keep within my limits and only use it when I have to.


If you bought an item on your credit card for £100 and your interest rate was 18.9% APR, how much would you pay in total if it took you twelve months to pay the money back?