Paying off your credit card

Using a credit card for your spending can have many benefits, from added legal protection to cashback or collecting loyalty points at your favourite retailer. However, credit card debt can quickly mount up if you don’t pay your card off in full each month. Here’s how to stop that happening.

Cut the cost of your credit card debt


If you’re struggling financially, you might be able to get up to a six month payment freeze on credit cards, store cards and certain personal loans.

Credit card debt is expensive.

Bank base rates are the lowest they have ever been at 0.5%, yet the average interest rate charged on a credit card is 18%.

Transferring your balance to another credit card with a 0% balance transfer offer, or one that charges a lower interest rate, will reduce your monthly payments.

Balance transfer your existing credit card balance

Top tip

Make sure you pay off your debt before the 0% introductory deal ends, otherwise you might have to pay a high rate of interest on the remaining debt.

One option for borrowers with existing credit card debt is to move it to a 0% balance transfer credit card.

These cards offer a period in which no interest will be charged on that debt, meaning that every penny of your repayments goes directly towards reducing the size of your original debt. (This assumes you’re not using the card for new purchases - it’s usually best to have another card for this.)

You will usually need to pay a fee to transfer your debt over, usually around 3% of the balance transferred (subject to a minimum fee level), so if your outstanding balance is £1,000 it could cost you £30 to switch.

These cards are usually only an option if you have a good credit rating.

If you’re not eligible for a 0% deal, look for a card with as low a rate as possible (and ideally one that will not charge a fee). But remember to look at the balance transfer interest rate, not the APR (as that is based solely on purchases).

Don’t stick to minimum payments

Minimum monthly repayments tend to be set at very low levels, sometimes as low as 2% .

If you only make the minimum repayment your debt could take decades to pay off and in that time you could pay thousands of pounds in interest.

  • Aim to pay off the entire bill each month so that you will not pay any interest at all. With a standard credit card, if you always pay off your monthly bill in full, you can enjoy between 45 and 59 days of interest-free credit.
  • If that’s not possible, pay off as much as you can and work out a repayment plan. Don’t use the cards for cash withdrawals.

Set a budget

Use our Budget planner tool to manage your finances better

Putting a budget in place allows you to take control of your money.

It’s a record of the money you have coming in and what you have left to spend each month.

Once you’ve done this you should be able to identify areas where you can reduce your spending.

The money that you save can then be put towards repaying your credit card debt.

Prioritise your debts

If you have debt on more than one credit card, you’ll need to work out which one to pay off first.

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You should focus on the most expensive credit card debt first.

If, for example, you owe £1,000 on a card charging 19% interest and another £1,000 on one charging 34%interest, concentrate on the card charging 34% first and pay off as much as you can.

Once the debt is cleared from that card, you can then look to pay off the credit card charging 19%.

Make sure you continue paying at least the minimum payment on each card.

Otherwise missed payments will lead to extra fees and could damage your credit rating, making it more difficult to get credit in future.

If you have debt secured against your house or on rent and utility bills, make sure you pay these first, as the consequences of not paying can be much worse.

I am worried I might not be able to keep up with my repayments. What should I do?

If you took out a coronavirus payment holiday it might be coming to an end soon. The deadline to apply for a payment holiday was 31 March 2021.

You can find out more about what to do when it ends in our guide to coronavirus payment holidays.

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Looking for money guidance, but don’t know where to begin? You’re not alone. Get started with Money Navigator, giving you instant help based on your circumstances.

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If you can afford to start making full or partial repayments, it’s in your interests to do so.

Your credit card provider might also discuss help that could include:

  • putting together a realistic payment plan
  • changing your payment due dates
  • reducing the interest rate on your cards
  • extending the repayment term.

However, be aware that this help may impact your credit file and your ability to get credit in the future.

Pay by Direct Debit

Setting up a Direct Debit for your credit card payments will ensure you never forget to pay.

It also means that you will not be charged a late payment fee, or risk losing the benefit of a 0% introductory rate.

Set up a Direct Debit now, preferably to pay the full amount every month automatically.

If you can’t afford this, pay as much as you can – card companies have to let you set up an automated payment for any amount you choose.

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