Credit card debt

Banks like to give away credit cards like they’re going out of fashion, which is all very well until you end up with a mountain of debt that negatively impacts your emotional and physical health, and affects your credit rating. With that in mind, here’s our simple guide to shaking off credit card debt.

Which credit card should I pay off first?

If you’ve got multiple credit card debts, you need to work out which one’s costing you the most money, and focus on that one first. The obvious place to start would be to sort them by interest from highest to lowest, and start with the highest. Remember to keep paying the minimum repayments on your other cards, however!

You might have gotten into debt by not budgeting, but it’s essential that you start planning your finances, in order to gradually tackle any money problems you might have. Creating a manageable budget that you can tackle one step at a time also has psychological benefits, turning a seemingly insurmountable problem into something… mountable.

Read our advice about making a budget here.

The avalanche method

There are a few different approaches you can use when it comes to paying off credit card debt, but our favourite is normally referred to as the avalanche method (I know it sounds bad, but try to imagine you’re at the top of the mountain, not the bottom). This can be broken down into five steps:

1. Start by ordering the debts from highest interest rate to lowest.
2. Always pay the monthly minimum required payment for each account.
3. Put any extra money towards the account with the highest interest rate.
4. Once the debt with the highest interest rate is paid off, use the money you were putting towards it to chip away at the next one.
5. Keep going until you’re debt free!

Try and transfer your debt to 0% interest

Keeping your debt at an eye-watering interest rate is going to:

a) Cost a lot.

b) Take a lot longer to pay off. It’s best to transfer the money to a lower interest deal. You can do this in two ways:

1. Switch to a balance transfer credit card

These cards offer a period of time where there’s no interest on your debt. This means all your payments go towards cutting down your actual debt rather than interest. However, there is a fee to transfer your debt over, usually about 3%. And you need a good credit rating to be eligible. Make sure you can pay off your debt in the interest-free period though, otherwise you’ll be stung with high interest on the remaining debt.

If you’re looking to transfer your balance to another credit card, Experian’s comparison service gives extra insight, including whether you’ll secure the necessary credit limit to cover your existing debt. Checking your eligibility before you apply for credit is the best way to proceed.

2. Switch to a low-interest credit card

Need a bit longer to pay off your debt than a balance transfer card gives you? It may be better to switch to a low-interest credit card, which will still make it easier to pay off than your existing bill. Plus, you don’t usually get charged for switching. There are loads of credit card comparison websites so try a couple to see which cards might be right for you.

Pay more than the minimum repayments

It’s not fun, we know. But paying off more each month than the minimum repayment is the only way to get rid of your niggly debt. If you just stick to the minimum, you could be 30 by the time you’ve paid the debt off. Even if it’s just a tenner or two extra, do put whatever you can towards your bill.

I’m really overwhelmed with my credit card debt – help!

If your credit card feels like such an overwhelming monster of doom, it might seem easier just to hide all your bills down your trousers and pretend they don’t exist. But, if you look away, the monster just gets scarier. Fortunately there are helpful lovely people out there who can help you feel less suffocated and sort out a repayment plan.

Good places to go for debt advice

Debt advice charities like Step Change, National Debtline, and the Debt Advice Foundation can all help you with your money worries. Give one of them a call for free, impartial advice.

Beware of dodgy debt-help companies though, check out our advice on free help with debt to make sure you’re only speaking to registered charities. If they ask you for any money, run away with your arms flailing. Be careful of quick-fix jobs like money muling, which can be really high risk.

If you need further support on this, give us a call on 0808 808 4994. We’re unable to give specific money advice but can guide you to the best places for expert support.