Fergus Muirhead on credit card debt

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Fergus answers money questions on Reporting Scotland and online

I'm Fergus Muirhead and I'm trying to answer any money or consumer problems you may be facing at the moment.

You can contact me by e-mail at [e-mail]

I will deal with a selection of your e-mails every second Monday on lunchtime Reporting Scotland, Scotland Live and on the BBC Scotland news website.

Fergus also has a consumer page on Twitter: http://twitter.com/consumerstuff

Question 1. I have a Halifax MasterCard which I have stopped using, but the interest rate goes up and down every month. I have balance transfers, purchases and cash interest sums, the cash amount goes back years, is there any way I can reduce this amount of interest?

Frank Forwell

Answer. This is a really interesting point you raise here Frank.

Many consumers couldn't tell you the main rate of interest they were paying on their credit cards, far less that the rate is different depending on how you build up the debt.

The other important thing to note is that credit card companies will apply the payment you make every month in a particular order, and the chances are that the highest rated debt - usually for cash advances - are usually the ones that are last to be paid off so the less you pay back every month the longer it will take to repay your debt, and the more you are likely to pay in interest.

You may want to look round the market and see if anyone is willing to take your balance and allow you to repay it at a lower interest rate.

Question 2. You might want to remind people that they really have to keep an eye out for that monthly credit card statement. I didn't receive statements for the last two months but didn't miss them until a couple of days ago. In fact I had thought it was only June's statement I'd missed, until I checked online. No minimum payment draws a penalty plus interest of course so it'll cost me maybe £30. Normally I pay the full outstanding amount so I'm not happy about it. I don't know if a credit card company (MBNA in this case) would do that on purpose simply to engineer penalties but I'm going to treat them as suspect in future.

Alan Balsille

Answer. A timely reminder here from Alan as more and more companies are now moving to online statements and these are fine as long as you remember to check them regularly.

I don't think MBNA would do this on purpose to you, Alan, but remember that you do need to check your statements thoroughly, whether they come by post or online.

Mistakes can be made and if someone is using your card or even if something has been added to your statement at the wrong price then the sooner it can be dealt with the better.

And remember especially to check your statements when you come back from holiday if you have been using your cards abroad.

It's good to remember too that credit card statements, like bank statements, are a great way to check your spending patterns and to help you budget!

Question 3. I recently got a phone call from a company called First Debt Elimination. They claim to be able to help me write off credit card debt on cards from before April 2007 due to them not complying with some Consumer Act. I was just wondering if you could shed any light on whether this is a legitimate claim or whether it's some scam artist trying their luck. Thanks for your help.

Kers

Answer. There are a number of these companies advertising similar 'debt elimination' services to the one you mention.

They do have a website, and they do have a number of 'success stories' on that site claiming to have managed to have debt written off in a number of cases due to non compliance with Consumer Credit legislation.

The crux of their argument seems to be that some debts are unenforceable because the paperwork was not completed correctly for a number of reasons, such as no signature or rates of interest missing from agreements.

They don't state on their website how they get paid but I believe that some of these companies (and this may not apply to First Debt) require an upfront fee.

I would need to be sure of what I was getting for my money if I was already in debt before potentially writing off more money on the hope that something was wrong with the original agreement!

The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.