How to pay off credit card debt more quickly
Persistent credit card debt is an issue for many – and like with other forms of debt, the longer you’re in it, the more it costs in the long run. The most effective thing you can do is to get rid of the debt as quickly as possible. While there’s no quick fix to this, here are some tips that might help make the process smoother.
Understand your credit card debt
Before talking credit card debt, understand what it’s made up of, how it increases over time and how to pay it off effectively. Here's what to work out:
Total balance and interest rates. This is what you owe on each card and the interest rates you are being charged. Every credit card comes with an APR – this is an ‘annual percentage rate’ which is the cost of borrowing over a year (including interest plus any fees). The higher the rate, the more expensive any debt you rack up will be.
Minimum monthly payments vs full repayments. Each card provider has a set monthly minimum payment – this is usually a small percentage of total debt (or a set minimum amount, usually £5). You must pay AT LEAST the minimum amount each month – if you don’t, it’ll go down as a missed payment, incurring a fee and going on your credit file. It’s best to pay off IN FULL each month though, as just paying the minimum will take much longer to pay off and cost more in interest.
The longer you borrow for, the quicker your debts grow. Credit card interest compounds, meaning not only do you pay interest on the original amount, you pay interest on the interest accrued. So he longer you owe, the faster the debt grows.
Create a budget and stick to it
Before anything else, you need to know where your money is going. This way you'll know if you have a little extra everything month to pay off more of your debt, or whether you're spending more than you have coming in, which may be why you find yourself in debt. We'll tell you how, and share some helpful planners and calculators to help you along the way...
Complete a budget. Start with our free Budget Planner, which will help you get a handle on your finances, including those unexpected expenses that can throw even careful planners off course.
Reduce outgoings. Once you understand what you're spending, it's time to make some pain-free savings and get some quick wins. Check all your regular outgoing payments, such as monthly direct debits and standing orders, and ditch any you can – they could be apps, magazine or beauty subscriptions that you don't make use of anymore.
You may even be able to get a refund for the time you've not been using it. See how to do it in Cancel direct debits. For heaps of ideas, take a look at our Money makeover – it WILL be worth your while to spend a bit of time on this.
Repay your most expensive debts first (highest APR)
If you’ve debts on multiple credit cards, here's how to do it step by step:
List all your debts. Take stock of your current situation and note down all your existing debts, including an overdraft if you have one.
Check your account(s) for existing-customer offers. Lenders sometimes offer special deals (either a lower rate or 0% for a set period) for transferring new credit card debt to your existing cards, though usually for a one-off fee. You can usually find these on your online account or by calling your card provider.
Shift debts to the cheapest card. Move debt from your highest-interest card to one with a lower interest rate using a balance transfer. If your credit limit isn’t high enough to move everything to one card, spread the debt across more than one cheaper card.
Look out for 0% balance transfer offers, as even a temporary break from interest can save you a lot – just make sure you know when the deal ends. Always factor in any transfer fees, as these can sometimes wipe out the savings. See our full Balance transfer credit card guide for the top deals.Repay the most expensive debts first – the most crucial part. Once all your debt's as cheap as possible, focus as much cash as possible on the most expensive debt first and just pay the minimum repayments on any less expensive debts. Once that's repaid, shift focus to the next highest-rate debt and so on. Continue this until you're debt-free.
Make more than the minimum repayment
The minimum payment is the smallest amount you must pay each month to avoid fees and damage to your credit file – but sticking to it can keep you in debt for years. As it’s usually a percentage of your balance, the amount drops as you repay, slowing progress and increasing the total interest you pay. To clear debt faster and cheaper, set a fixed monthly repayment higher than the minimum and stick to it.
Always try to pay more than the minimum – even a fixed extra amount speeds things up dramatically and cuts interest. Set a direct debit for a fixed sum higher than the minimum so repayments don’t shrink as your balance drops.
Seek help if you’re struggling
The solutions above all involve you being in a functional relationship with your debt, ie, you can afford to repay and just want to cut the cost. But for some, a different tack is better - full help in our Debt crisis help guide. I have three questions to ask...
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Do you struggle to meet minimum monthly payments?
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Is your total debt (not mortgage/student loan) over one year's salary?
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Do you have sleepless nights or depression/anxiety over debt?
If you answer 'yes' to any of these, forget the solutions above, and instead get free, one-to-one debt-counselling help from Citizens Advice, StepChange, National Debtline or CAP (which gives emotional support too).
They're there to help, not judge. The most common thing we hear after is: "I finally got a good night's sleep." Just go for it, read inspiring stories in our Debt-free wannabe forum, and also see our Mental Health & Debt guide.
Paying off your credit cards FAQs
List your debts by interest rate, with the highest first, and throw all spare cash at that one while paying the minimum on the rest. Once it’s cleared, move to the next highest. Overdrafts often top the list, as they can be around 40% APR. You can also speed things up by moving debt to a 0% balance transfer card – just check any fees don’t wipe out the savings.
Yes, one of the key steps in tackling persistent credit card debt is paying off your most expensive debts first. Cards charging higher interest will be costing you more to service, so focus any available cash on these first. You may also want to explore doing a balance transfer, moving debts on your most expensive cards to those charging a cheaper interest rate.
There's no guarantees on this one, but if you show that you can consistently repay debts on time, it can have a positive impact on your credit score. Missed payments will show up on your credit report, and could impact your ability to get credit in future.
For a full list of tips, try our How to improve your credit score guide.
If you are in difficulties, the cliché "contact your lender" is a good one. Hopefully it will try to help. Changing your repayment schedule is preferable to you defaulting – and though it will hit your credit score, it's better than a county court judgment or decree against you.
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