Managing Credit Repayments

MoneyHelper

Once you know where you are and what you owe, take these steps to improve your situation.

Use savings to pay off credit

If you do have savings, even with higher interest rates, the rate you’re getting on them is likely to be less than the interest you’re paying on your credit cards. So it can be better to use some of the money to get your credit balances down.

When you’re back in control of credit again, make sure you build savings up. As a rule of thumb, you should aim for at least three months income to give you the buffer you need.

Don’t take out cash on a credit card

Cash withdrawals on a debit card are fine, but as soon as you take cash out using a credit card, your credit score takes a hit, which can make it more difficult to get credit in the future.

And you get charged extra for taking cash out on credit as soon as you take it out because there is no interest- free period, like there is with purchases. Your best bet is to just not do it.

Check what you’re paying to use your overdraft

When you use your overdraft, you’re going into debt. Overdrafts are typically more expensive than credit cards and loans if you use them long term.

Used well, they can have a positive impact on your credit score. To do this, you need to:

  • stay within the limit your bank has set for you
  • regularly pay off your overdraft.

Your credit score will be negatively affected if you:

  • go over your agreed limit without talking to your bank
  • do not make significant repayments.

So it’s best to go into your overdraft for short-term borrowing or emergencies only.

If you’re starting to rely on your overdraft rather than use it occasionally, ask your bank if you can have an interest-free buffer – some providers will offer up to £500.

If things are getting overwhelming

If you need to use credit to pay for everyday essentials because you’re struggling to keep up with debt payments, you’re not alone and can take steps to get help.

Talk to your provider about ways you can manage costs and repayments as there is lots of extra support out there.

Solutions could include negotiating a repayment plan you can afford or putting you onto a cheaper tariff.

If you’re struggling financially, gas, energy and water providers will often do a free benefits and grants check to make sure you’re getting everything you’re entitled to.

Useful resources

The GamCare Forum is an online message board, providing a safe and secure space for users...
We are the leading provider of nationally accredited Advice and Guidance, Legal Advice...
We provide a range of support for people struggling with the impact of gambling on their...
Mental Health & Money Advice is the first UK-wide online advice service designed to...
Advice NI, in association with The Good Things Foundation, is offering digital skills...
We run regular sessions in the GamCare online chatroom, where users can use live text...
GamCare recognises that gambling can be harmful to both physical and mental health, and...
No time for a phone call? You can now get in touch with MoneyHelper using Whatsapp. The...
Advice NI, a registered charity founded in 1995, exists to provide leadership and...
Advice NI is the leading provider of nationally accredited Advice and Guidance, Legal...
It can be difficult to manage all the different bills and payments in our lives. The...
Use this calculator to see how much a loan will cost you or how quickly you can pay off...
Our free Budget Planner puts you in control of your household spending and analyses your...
If you’re struggling with debt, it can be hard to know where to turn. But with lots of free advice services available across the UK, you can find help in a way that’s best for you.