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How to Pay off Credit Card Debt

If you’re struggling to pay off credit card debt, there are some options available to you. For the latest advice and support, apply with Consolidation Express today.

If you’re struggling with credit card debt, you might be wondering how to pay off credit cards. Getting a credit card can be a great way to purchase things you wouldn’t normally be able to afford and even improve your credit rating. But if you’ve taken out multiple credit cards, things might get out of control financially. It’s no wonder that more and more people are turning the simple debt consolidation loans to turn multiple debts from credit cards into one simple monthly payment.

So, how can you pay off credit card debt without going above your means or making things worse?

Tips on paying off your credit cards

01. Don't just stick to the minimum payments

Meeting the minimum payments each month is great, but if you can afford to pay more then you should be.

Paying off your credit card balance in full each month could be a great way to improve your credit score and stop you from going into credit card debt. It shows credit card providers that you are responsible with money and you’re only using your card for things you can afford. This means you’ll be more likely to be accepted for credit in the future.

02. Can't pay more? Make sure you always at least meet the minimum payment

If you can’t afford to pay more than the minimum payment, don’t fret. It is always better to meet the minimum payment rather than pay late or miss payments because you want to try and save up and pay back more later. Once you start missing payments you could incur higher interest rates and late charges.

03. Don't go over your credit limit

If you’re keen to keep a good credit rating, then it’s important you don’t go over your credit limit. Credit limits are a set amount that you can borrow. So, if you’re credit limit is £1,000, you can’t spend more than that. If you do, your credit card issuer may charge you a fee.

If this happens more than once, your credit card issuer may lower your credit limit meaning you can borrow less. If it continues to happen, they may decide to stop you from borrowing altogether by closing your credit card account.

04. Pay by direct debit

Paying by direct debit or standing order is a smart way to make sure you never miss a payment. Many credit card companies will offer an app where you can set up a direct debit quickly and easily via online banking, just using your phone.

They’ll still always offer to set this up via telephone banking if you can’t set it up online.

Setting up a direct debit makes it simple and easy to make your monthly payments and means you’ll never be lumped with late fees.

It’s always possible to cancel or amend this direct debit if your financial position changes.

05. Don't use credit cards for cash withdrawals

Credit card companies will charge you if you use your card for a cash withdrawal, so it’s important you’re only ever using your debit card at an ATM for cash. Using your credit card at an ATM to withdraw cash is a red flag to your credit card company that you’re struggling financially – and it could affect your credit score.

If you want to withdraw cash from your credit card, it’s better to transfer it to your debit account first.

06. Set a strict budget

No one likes living on a budget but sometimes it’s necessary, and it could help you to avoid having to find a debt solution.

Start with:

  • Working out how much you spend each month including utility bills, rent or mortgage, groceries, household items, clothes, socialising, and anything else you might spend money on such as subscriptions
  • Minus that from your monthly incomings
  • At this point, you can see whether your outgoings outweigh your incomings and if they do but only by a small percentage, you might be able to increase your credit card repayments with some strict budgeting

Always keep in mind, a budget is temporary. Once you’re in a better financial position you can afford to spend more on yourself and what you enjoy.

07. Prioritise your repayments

Sometimes in life, your credit card payments might take a backseat especially if you have extra expenses this month such as a birthday or a holiday but ignoring your credit card debt or choosing to pay for other things over it, could be costly because of interest charges and late fees.

It’s best to think of your credit card debt as a priority bill, the same as your energy bills or rent, and at least make the minimum payment every month.

If you have more than one debt, it’s important to work out what debts need to be prioritised. If you have several credit card debts, it might be important to prioritise the one with the highest interest rate – this is because it’s costing you the most money.

However, if you have more debts such as personal loans, payday loans, and an overdraft, it might be better to prioritise paying those back first as they may have even higher interest rates.

08. Get rid of your credit card

If you’re consistently missing payments or making late payments toward your credit card, the best thing to do is pay off your credit card debt and then get rid of the credit card altogether.

This may seem extreme, but without the temptation there, it might be easier to avoid overspending and limit your spending habits.

Cutting the cost of your credit card debt

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01. Balance transfer cards

A balance transfer credit card is a type of credit card that allows you to borrow enough money to pay back your current credit card debt and then pay back your new credit card provider. Why would you do this? Normally a balance transfer card will come with an interest free period meaning you could save money on interest payments.

It’s worth noting that they will charge a balance transfer fee of around 2 – 3%.

Balance transfer cards and money transfer cards are different. If you’re looking to transfer balances between credit cards, then a balance transfer card is the right choice. if you’re looking to transfer money into a debit account, for example, to pay off an overdraft, you need a money transfer card.

02. Consolidation loans

A debt consolidation loan is a type of loan that enables you to borrow enough money to cover all your existing unsecured debts so that you just make one monthly payment moving forward. Debt consolidation loans are a better option if you have more than one credit card or more than one unsecured debt.

If you’re struggling to meet your minimum repayments or have several loans that are getting out of hand, fill in our online application to see how much you could be paying back each month. You could end up paying a lower interest rate and having more money left over at the end of every month to do something you enjoy.

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The key takeaway points:

  • Pay back as much as you cannot just the minimum payments
  • Set up a direct debit or standing order to your credit card account
  • Prioritise your credit card debt
  • If you're struggling to make payments, work out a realistic budget
  • If you can't afford to meet your minimum payments, investigate another option such as a balance transfer card or a debt consolidation loan
  • Once you've repaid your credit card balance or credit card balances, it might be a good idea to get rid of the credit card, that way you're not tempted to get back into debt

Interested in a debt consolidation loan?

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Unsecured Loan Representative 69.9% APR

Borrowing £7,500 over 36 months, repaying £502 per month, total repayable £18,083. Total cost of credit £10,583. Interest rate 69.9% (variable). The lenders on our panel offer loans for 12-60 months, with rates from 5.8% APR to 89.9% APR. The Representative Example is based on all loans paid out by lenders between 19th Apr 2022 and 23rd Dec 2022.

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If you choose to add fees to the loan: Assumed borrowing of £25,000 over 120 months, plus a broker fee of £2,500 and a lender fee of £250 would result in monthly repayments of £345.55, the borrowing rate is 8.6% (variable), the APRC is 11.7% (variable), total charge for credit £16,466.00 and the total amount payable £41,466.00. You can opt to pay the lender and/or broker fees upfront, your adviser will discuss these options with you.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it. All rates vary subject to loan amount, loan type and status. Repaying your debt over a longer period of time may increase the amount you pay.

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