How should we tackle our debt?

Q Currently, we have a credit card balance of ?9,000 on a card with an interest rate of 0%, which will stay the same until October 2004. We also have an approved bank overdraft of approximately ?5,000.

We are finding it difficult to repay all of this and it will become much harder if there are no further 0% credit card deals around come October. Would it be best to try to pay all this back month by month, should we take out another loan to repay the two debts jointly, or ought we to increase our mortgage? I fully understand that there are no easy options in these situations, but your advice would be much appreciated.

JM

A Recent stories in the press have highlighted the dangers of running up credit card balances and transferring them from one card to another. As you say there are no easy options, but it is worth remembering that the interest rates charged on credit cards are outrageously high partly because of the risk involved from default and frauds. It makes sense, therefore, to avoid borrowing on a credit card if at all possible - a 0% interest rate is only a temporary expedience that can encourage you to continue living beyond your means.

It is much better to tighten your belts and reduce the debt now before it becomes really expensive. The cheapest way to borrow money is a mortgage, but this does involve using your house as collateral with dire consequences if you are unable to keep up the repayments.