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Paying off credit card debt

How to pay off credit card debt

published: 23 June 2022
Read time: 5 minutes

Struggling with debt on your credit cards? Our guide explains your options and the steps you can take to pay it off more quickly

Credit cards are a popular way to manage finances in the UK. They enable you to spread the costs of payments, clear debt from elsewhere and even, in some cases, earn rewards or cashback on your spending.  

But if you can’t pay them off in full every month you can slip into debt that can quickly mount up. Here we’ll provide some tips to get on top of your credit card debt, so you can start to feel more in control. 

What is credit card debt?

Credit card debt is the balance that you owe on your credit card account. Every time you spend you take on some debt, but as long as you clear the balance every month, you won’t have to pay any interest on this borrowing. The danger comes when you fail to pay off what you owe, and you’re then charged interest on the outstanding amount. Interest rates on credit cards can be high and mount up quickly. 

couple looking at laptop

How is credit card debt built up?

You build up credit card debt by not paying off the balance on your account in full each month.  

The higher the balance, usually the more interest you’ll end up paying. Interest is also compounded, meaning you pay interest on the interest, which is why you should try not to let it build up. There can be exceptions, such as having an introductory 0% rate where interest won’t be added to your balance for a period, but these dealsonly last for a fixed number of months. 

Does having credit card debt affect my credit score?

Having credit card debt can negatively affect your credit score because it tells potential lenders that you are struggling to pay what you owe and might be a credit risk for more credit cards, loans or mortgages.  

But if you clear your balance every month, it can have a positive result. It helps prove that you can manage your finances responsibly and your credit score could rise. Our guide gives you more tips on how to improve your credit score

How should I pay off my credit card debt?

There are a number of ways you can pay off your credit card debt, including:

Bank transfer – pay off your balance from your current account in one go. If you use digital banking this is usually straightforward. Just go to the credit card app or website and follow the instructions. 

Direct debit – by setting up a monthly direct debit you can make sure you always pay off your credit card balance in full each month from your bank account and don’t get hit with any late payment charges that increase the debt.  

Balance transfer – a balance transfer credit card is a specific type of credit card where you pay low or 0% interest for a set period. If you are approved for a balance transfer card, you can shift existing credit card debt on to it and then pay it off (without building up interest charges) over a longer period. 

Debt consolidation loan – if you have a high level of credit card debt, you could consider taking out a personal loan at a lower interest rate that allows you to clear the balance on your credit cards. You can then pay the loan back over a fixed number of months. If might save you money in overall interest and make the monthly repayments more affordable. 

How can I cut interest on credit card debts?

Taking out a 0% balance transfer credit card allows you to transfer money from existing credit cards and pay no interest for a set period.  

Even if you cannot take out a 0% balance transfer card – perhaps due to a less than perfect credit score – a new card that offers a lower rate than your existing credit cards could help you consolidate what you owe and bring down costs.   

Factor in that there is likely to be a one-off transfer fee for the balance transfer. Once approved for a balance transfer card, you can simply transfer your debt balance from existing cards to the new one.  

What if I can't pay my credit card debts?

If you feel your credit card debt is out of control, speak to your card providers and see what help they can offer. They may be able to switch you to a better deal, offer a payment holiday or help restructure your debt.  

Different lenders take different approaches, but all regulated companies must take a sympathetic and supportive view when customers express financial difficulties. 

Bear in mind interest and charges may be added to your debt during a payment holiday and any tailored support will show on your credit file. 

If you know you won’t be able to keep up repayments, there are a number of free debt advice charities, such as Step Change, National Debtline and Citizens Advice. They can provide advice and practical steps to help you get your finances back on track. 

They can speak to lenders on your behalf, for example, and support if you’re being harassed by debt collectors. They can also work out a realistic budget and create manageable debt repayment plans which can then be given to your creditors. 

What should I do after I've paid off my credit card debt?

Once you’ve cleared your debt it’s important to try to avoid getting into the same position again. Often this is through improving your spending habits and budgeting more effectively, where possible.  If you know you’ll find it hard not to impulse spend, consider only keeping a credit card for emergencies. 

If you do continue to use a credit card, make sure you set up a monthly direct debit to pay off your card balance in full every month. This way you won’t risk late payment charges

Staying out of debt doesn’t just put you in a better financial position, it can also help improve your credit rating so when you need to borrow for a necessity in the future you have a better chance of being accepted and at the best rates.  

Other helpful guides

We have a range of useful guides for credit card borrowers, including: 

What is an APR

Guide to credit card charges

What is a balance transfer

Compare credit cards with MoneySuperMarket

Searching for a new credit card with us is quick and straightforward. We can look across the market to find deals from leading providers to suit your needs. All you need to do is give us a few details about you and your finances. We’ll do a 'soft credit search' to find the cards most suited to you - and it won't impact your credit score in any way.  

We’ll show you your chances of being accepted for different card deals, so you aren’t left disappointed. Searching in this way puts you in control because you’ll know where you stand and can apply for a new card with greater confidence.

MoneySuperMarket is a credit broker not a lender – this means we’ll show you products offered by lenders. We never take a fee from customers for this broking service. 

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