Take steps to detox existing borrowing

Want to get on top of your debts? Here’s how to get a handle on what you owe

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The pandemic has taken its toll on our finances in all sorts of ways – leaving many of us with concerns about loss of income, loss of job security, and money worries more generally.

During lockdown, banks gave customers a bit of breathing space with some of their debt by offering a £500 interest-free overdraft buffer for three months. This came in response to a request from banking regulator, the Financial Conduct Authority.

While that was, for many, a real helping hand, this support is changing.

What’s happening to overdrafts?

As things stand, the rule on automatic interest-free £500 overdrafts has been extended – and is in place until the end of October. However, some banks are now only helping those struggling due to Coronavirus, or who ask for assistance.

With this in mind, you need to be wary about continuing to live in the red, as the rates on this type of borrowing are likely to go up again soon.

If you’ve built up an overdraft, now is a good time to think about moving to cheaper borrowing.

How can I detox my debts?

One way to detox your debt is by moving it to products with the lowest interest rates you can find.

If you are looking to switch to lower-cost borrowing, you could take out:

  • a 0% balance transfer card
  • a low-rate personal loan

Both offer a more structured means by which to clear your debt.

Representative example: If you spend £1,200 at an annual rate of 19.9% (variable) p.a. your representative APR is 19.9% APR (variable)

Opting for a balance transfer card

You can use a balance transfer card to manage existing debt, or consolidate several credit card repayments into one manageable monthly repayment. Transferring debt to a 0% card will cut interest charges, making it cheaper and quicker to clear what you owe.


  • If you’ve got debt, transferring it to a 0% balance transfer may help you pay it off without incurring further interest charges
  • Some cards can offer lengthy interest-free deals of more than two years
  • This type of plastic makes debts more manageable


  • You may face a one-off ‘balance transfer fee’ of up to 3%, but this could be less than the interest you’re already paying on your existing balance
  • Make sure you pay off at least the minimum payment each month. If you don’t, you could face a penalty, lose the 0% deal – and could damage your financial footprint
  • If you fail to clear your debt in the interest-free period, costs could sky-rocket

Tips for balance transfer cards

  • Try and avoid the temptation of going from month to month making only the minimum repayment. Start paying off more than the minimum so you actually chip away at the debt, and you will find your balance goes down a lot sooner
  • Once you’ve made a transfer, ensure the balance is repaid in full before the introductory deal ends, to prevent interest adding to the bill

Representative example: If you spend £1,200 at an annual rate of 19.9% (variable) p.a. your representative APR is 19.9% APR (variable)

Best buy deals: balance transfer cards

Santander is currently offering 26 months interest free with a representative rate of 21.7% APR (variable)*, but comes with a £3 monthly fee. After the promotional period, you will be charged 3% (minimum £5) on transfers.

Similarly, Sainsbury’s Bank are offering 26 months interest free with a representative rate of 19.9% APR (variable)** but you must be a Nectar member to be eligible. A 3% balance transfer charge applies on transfers made at application. The charge will depend on your current offer thereafter.

For more information on finding the best balance transfer card deals for your needs, go here.

Opting for a personal loan

With a loan, you can consolidate your debts into a single monthly repayment. This can make life a lot easier if you’ve got several smaller sums that you owe, and you’re struggling to keep track of them.


  • You can choose the term over which you want to repay your personal loan. This can range from, say, two years right up to 10 years
  • You get a fixed repayment plan and a timescale to clear debt


  • To get accepted for a personal loan, you will need to have a squeaky clean credit record. If you don’t have a good credit score, you’ll get hit with higher rates of interest, or may struggle to qualify
  • If you miss any repayments, this will have an impact on your credit rating

Tips when applying for a personal loan

  • By making use of MoneySuperMarket’s Eligibility Checker tool, you can find the loan offers you’re most likely to get accepted for. By only applying for the loans that are right for you, you can help protect your credit rating.
  • If you have a poor credit rating, you can take steps to improve your score. Simple things include getting registered on the electoral roll, making sure your address is up-to-date on all your accounts, not maxing out your credit allowance, and paying all bills on time.
  • You can apply for a copy of your credit report from Experian, Equifax or TransUnion.
  • You can take control of your credit score with MoneySuperMarket’s Credit Monitor.

To compare loan deals on offer, go here.

* Representative example: If you spend £1,200 at a purchase rate of 15.9% (variable) p.a. with a £3 monthly fee your representative APR is 21.7% APR (variable)

**Representative example: If you spend £1,200 at a purchase rate of 19.95% (variable) p.a. your representative APR is 19.9% APR (variable)

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