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If you’ve spent a lot on your credit cards in recent months and you’re worried about how you’ll pay it off, try not to worry, there are plenty of ways to tackle it and get on top of your finances, so you can start to feel more in control..
One of the quickest ways to pay off what you owe is to reduce the amount of interest you’re paying.
If you have a number of credit cards to clear, start by finding out which of them has the highest interest rate, as this is the credit card that’s costing you the most in interest payments.
You should be able to find your interest rate on your monthly statements, but if you can’t, your credit card company will be able to tell you. Once you’ve worked out which card is charging you the most interest, pay as much as you can towards this card each month, while also keeping up with the minimum monthly repayments on your other credit cards.
When you’ve cleared the credit card with the highest interest rate, start paying more towards the card with the next highest interest rate and so on. This process can be an effective way to organise and prioritise which card to clear first.
Just remember to keep making at least your minimum payments on your other cards so that you don’t end up facing late payment charges and jeopardising your credit score.
The more you can repay each month, the quicker you’ll be able to pay off what you owe (and avoid further interest accruing on your balance).
Minimum monthly repayments are often set at low levels, so if you can afford to pay more than this each month you’ll pay off your credit card quicker and save interest.
Our handy credit card calculator is an easy way to work out how quickly you can pay off your outstanding balance by adjusting the amount you repay every month.
Setting up a monthly direct debit will ensure you don’t miss a payment on your credit card. If you miss payments, you’ll be charged a late payment fee.
Similarly, avoid taking cash out on your credit card. When you make cash withdrawals you’ll normally have to pay a fee, and you’ll be charged interest from the date of the withdrawal.
Using a 0% balance transfer card can be a cost effective way to pay off your balance, as you’ll reduce the amount of interest you’re paying.
You can do this by transferring your balance to a new card with a 0% balance transfer deal. That way, you’ll be able to avoid paying interest for a set amount of time – up to two years or more in the very best cases – which should help you to make a dent in what you owe.
Representative Example: If you spend £1,200 at a purchase interest rate of 19.9% p.a. (variable) your representative rate will be 19.9% APR (variable).
You’ll usually have to pay a fee (typically around 2%-3% of the overall balance) to make your transfer, but this can still be worth paying when you take into account the amount you’ll save overall. If you get a 0% balance transfer card, it’s best to avoid using it for purchases and stick to using it for its purpose – clearing your balance.
It’s also worth noting that you will need a good credit score to get the most competitive balance transfer credit card deals.
When it comes to your credit score, a little TLC goes a long way.
Credit Monitor shows you your credit score, and gives you handy, personalised tips to help improve it – all for free.
Improving your score could give you a better chance of accessing better balance transfer deals, to help you take control of your debt. Plus, you’ll get alerts to let you know about any activity on your credit file that could be a sign of something suspicious, so if you need to act on it, you can get on top of it quickly.
If you can afford to clear your balance in less time, some balance transfer cards offer shorter 0% periods but no transfer fee, so you could save even more money.
Give your score some TLC