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How to pay off credit card debt

By:  Sean LaPointe | 19th October 2021

Reviewed By: Alice Guy (FCA) on 15th October 2021

If you’re struggling to pay off credit card debt you would probably love to get it cleared as soon as possible. But interest payments can make it difficult to get on top of your debt and get it paid off.

The good news is that the first step to paying off credit card debt is facing up to the problem.

Here I take a look at how to pay off credit card debt. I give my top tips to help you take control of your finances and stay out of debt.

What’s so bad about credit card debt?

Credit card debt can snowball very quickly. If you don’t pay off your balance in full each month, your credit card will be charged with interest. And that interest means that your balance could continue to grow even if you don’t make any more purchases.

It’s easy to get trapped into spiralling debt. As your debts grow you have less and less money and pay for purchases. Then there’s a big temptation to put further purchases on your credit card. It can be a vicious cycle.

How to pay off credit card debt

If you are facing spiralling credit card debt then here are my top tips to help you pay it off:

1. Identify potential balance transfer opportunities

You may be able to transfer your existing credit card balance onto another card with a lower interest rate.

If you can qualify for a 0% balance transfer card, this is often the best route. As the name suggests, a 0% balance transfer card has a 0% introductory offer where you are not charged any interest for a predetermined period. This interest-free period can last a few months, but in some cases can stretch to more than two years. This can make it easier to pay off your credit card debt.

An additional tip here is to look for a balance transfer card that also has a lower standard APR than your current cards. In this case, even if you’re unable to pay off the full debt before the interest-free period is over, your interest charges on the remaining balance will be lower than on your current card.

2. Identify your highest-interest credit cards and double the payments on them

Sadly, if you are struggling with a huge debt and it’s hurt your credit score, it might be hard to get approved for a balance transfer card. If this is the case for you, then it would be better to prioritise paying off the cards with the highest interest rates first

The faster you pay off the credit cards with the highest interest, the more interest savings you’ll make. This can be easily achieved by doubling your monthly payments on these cards. By doing this, if your original repayment period was one year, you could now pay off the debt in six months, saving you a whopping six months’ interest!

Start by making a list of your credit cards in descending interest rate order while also identifying the minimum repayments on each. Concentrate on paying off the cards at the top (with the highest rates) first. Double or triple the minimum repayments where possible to pay them off faster. You can then work down the list of your cards as you clear the balances.

As you do this though, be sure to make at least the minimum payments on your other cards. Missing payments on any cards could harm your credit and make your situation even more difficult.

3. Use unexpected or extra funds to pay off your debt

Once in a while, you will come across some unexpected cash or funds. These may include monetary gifts from family or friends, unexpected bonuses or raises at the workplace, or even a tax refund.

While it might be tempting to go out and do some shopping, do not use this extra cash to buy yourself an extravagant gift or go for that holiday you’ve been craving. These can – and likely should – wait at least until you have made a significant dent in your credit card debt.

Instead, commit all or a large proportion of this unexpected cash to your credit card debt repayment. 

4. Use your savings

If you have a savings account that pays very little interest (one or two per cent), seriously consider using some of the money in this account to pay off some of your debt. 

If you are paying 19% interest on a credit card debt, for example, paying it off first will give you a significantly better ‘return on investment’ than the few percentage points you’re getting from your savings account.

Consider this option in the proper context of your overall financial situation though. If you have a concern that you’ll imminently need those savings for day-to-day living expenses, then this particular tactic may not be for you.

One thing you may want to do if you take this approach is treat it as a loan to yourself. Once your debts have been paid off, repay this loan (perhaps with interest), to make sure that you keep your savings topped up.

5. Refrain from using your credit cards

Commit to going for several months without using your credit cards until you have considerably reduced your debt. Instead, use your debit card or cash for everyday transactions.

In the long term, this will make you more financially conscious and you might realise that you have been using your credit card to purchase items that you do not really need. Also, since you are no longer adding to your debt, it will be easier to offset your current credit card balance all the faster.

What should I do next after I’ve paid off credit card debt?

If you have managed to pay off credit card debt then that’s fantastic news. It’s a good idea to take some steps to protect yourself from getting into credit card debt again.

What if I can’t pay off my credit card debt?

If you can’t get on top of your credit card debt then it might be time to get some help. Charities like Stepchange and Citizens Advice can help you come up with a plan to clear your debts. They will also sometimes talk to credit card companies on your behalf to arrange a debt management plan. This is a type of arrangement where credit card companies agree to let you pay a reduced rate of interest. It can help to clear your debts more quickly.

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Frequently Asked Questions

How does APR affect credit card debt?

APR stands for annual percentage rate. It’s the interest charged on your credit card balance if you’re not on an introductory deal. And the bad news is that the APR on credit cards is often extremely high.

Credit cards typically have an APR of around 23%. That means that a debt of £1,000 would attract annual interest of £230. That’s a lot of interest!

Should I do a balance transfer?

If you are eligible for a 0% balance transfer credit card then it often makes sense to transfer your existing balance to save interest. Because you won’t be paying interest, it frees up money to help pay off your credit card debt.

Unfortunately, 0% credit cards are not available to everyone. If you have a poor credit rating then you may be declined if you try to apply. Many websites allow you to do a soft credit check first to see if you are likely to be accepted. It’s a good idea to do this first because if you apply for a 0% credit card and are declined then it might affect your credit rating.

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