Using a credit card for your spending can have many benefits, from added legal protection to earning cashback at your favourite retailer. But if you don’t pay your card off in full each month, credit card debt can quickly mount up. 

Cut the cost of your credit card debt

Credit card debt can be expensive. The average interest rate charged on a credit card is 22%. Transferring your balance to another credit card with a 0% balance transfer offer, or one charging a lower interest rate, will reduce your monthly payments.

Balance transfer your existing credit card balance

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. This means 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’ll 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 don’t qualify for a 0% deal, look for a card with as low a rate as possible (and ideally one not charging a fee). But remember to look at the balance transfer interest rate, not the APR (as it’s based solely on purchases).

Don’t stick to minimum payments

Minimum monthly repayments tend to be set at very low levels. These are sometimes as low as 1%,plus fees, interest and charges but most will be higher.

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

Here are some tips:

• Aim to pay off the entire bill each month so you won’t 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 56 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.

Credit card providers are obliged to contact and encourage people who have made very low or minimum payments on their credit cards for the past 18 months. This is where you've paid more in interest, fees and charges than you have paid towards reducing your balance.

Lenders are required to suggest higher affordable repayments. If you don’t respond, or ignore the issue, and the situation persists for more than 36 months this could lead to your account being suspended.

Pay by Direct Debit

Setting up a Direct Debit for your credit card payments will make sure you never forget to pay. It also means you won’t be charged a late payment fee or risk losing the benefit of a 0% introductory rate or promotional offer.

You can usually set up a Direct Debit to pay the full balance, minimum amount, or a fixed amount every month.

Or, if your income varies from month to month and you’re worried you might not have enough money in your account to cover a Direct Debit, you can pay manually.

Set a budget

Preparing a budget allows you to take control of your money. It's a summary of the money you have coming in and your outgoings so that you can be clear what you have left to spend each month..

When you've done this, you might be able to identify areas where you can reduce your spending. Any money you save can then be put towards repaying your credit card debt.

Prioritise your repayments

If you owe money on more than one credit card, you’ll need to work out which one to pay off first. This is likely to be the one with the highest interest rate.

For example, if 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.

When 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. This would make 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. This is because the consequences of not paying can be much worse.