Easy ways to tackle credit card debt

Meet the new season with a spring in your step and a plan to get rid of your credit card debt.

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If you’ve racked up a lot of credit card debt in recent months and you’re worried about how you’ll pay it off, fear not, there are plenty of ways to tackle it and get on top of your finances in no time.

Use a 0% balance transfer card

One of the quickest ways to get rid of credit card debt is to reduce the amount of interest you’re paying.

You can do this by transferring your debt 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 three years in the very best cases – which should help you to make a dent in your debt.

Be aware you’ll usually have to pay a fee (typically around 2%-3% of the overall debt) to make your transfer, but this can still be worth paying when you take into account the amount you will save overall.

The MBNA Platinum credit card, for example, offers 0% for 36 months on balance transfers made in the first 60 days, and has a 1.99% fee (the fee rises to 5% after the first 60 days).

Make every effort to clear your debt within those 36 months as after that you’ll pay 21.9% pa (variable). The card has a representative rate of 19.9% APR (variable)*.

It’s worth noting that you will need a good credit score to get the most competitive balance transfer credit card deals. But by using our Eligibility Checker tool, you’ll be able to see the cards you are most likely to be accepted for, without harming your credit score.

No fee balance transfer cards

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.

For example, the Santander Everyday credit card offers 27 months at 0% on balance transfers and has no fee (once the 0% window is up you’ll pay 3% on any new transfers). 

So if you had a debt of £2,500, for example, and you paid off £95 a month, you’d clear it within the 27 months and not have to pay a penny of interest.

Be aware if you don’t pay off your balance before the 27 months are up, you’ll pay 18.9% pa (variable). The card has a representative rate of 18.9% APR (variable)**.

Low interest rate credit cards

If you’re unable to clear your debt before the interest-free window ends, you could shift it to yet another 0% balance transfer card, but the problem with this is you may have to pay another fee.

If you’d prefer not to keep moving your debt around, an alternative is to use a credit card with a low interest rate that lasts for the life of the debt.

Bank of Scotland, for example, offers a Low Rate Card with a representative rate of 6.4% APR (variable)*** and no transfer fee, so long as you make your transfers within the first 90 days (after this you’ll pay a 3% fee).

5 more tips for tackling credit card debt

  1. Pay the most expensive card first: If you have debt on a number of credit cards, always tackle the one with the highest interest rate first.
  2. Pay off more than the minimum: Minimum monthly repayments are often set at low levels, so try to pay off more than that if you can afford to.
  3. Set up a direct debit: Setting up a monthly direct debit will ensure you don’t miss a payment on your credit card. If you miss payments, you will be charged a late payment fee and could lose your 0% interest rate.
  4. Never use your credit card for cash: When you use a credit card for cash withdrawals you will normally pay a fee, plus interest will be charged from the date of the withdrawal.
  5. If you get a 0% balance transfer card, avoid using it for purchases: Use your card for its purpose – clearing existing debt.  

 

* 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).

**Representative Example: If you spend £1,200 at a purchase interest rate of 18.9% p.a. (variable) your representative rate will be 18.9% APR (variable).

***Representative Example: If you spend £1,200 at a purchase interest rate of 6.45% p.a. (variable) your representative rate will be 6.4% APR (variable).

 

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