How To Pay Off Credit Card Debt

Read on to find out how to eliminate credit card debt.

Updated: May 18, 2024
Matt Crabtree

Written By

Matt Crabtree

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Credit cards are undoubtedly helpful, but it’s easy for debts to accumulate, and the pressure to pay them back can be overwhelming. Debt isn’t uncommon, especially in the UK, as the average credit card debt per person is £1,174.62. Trust us when we say you’re not alone.

A credit card can save the day in your hour of need-especially when unexpected expenses occur. However, regardless of how helpful credit cards are, you’re more often than not left with the burden of debt piling up.

Don’t let high interest rates and persistent debt hang over you; take control of your debt today.

In this article, you’ll learn how to eliminate credit card debt and reduce future reliance on credit cards.

Assess and Break Down Your Credit Card Debt

To begin reducing your credit card debt, you need to know what debt needs paying off and which has the highest interest rates. We’ve come up with some quick tips for assessing your debts:

Quick tips on evaluating your credit card debt:

  • Calculate your credit card debts and list each debt, the amount, and when the payment is due.
  • Look through your debit card statements and monthly payments to see your incoming and outgoing payments.
  • After all necessary expenses, see what money is left over and decide on a realistic amount for credit card repayments.
  • If you’re worried about paying back your credit card balance, contact your credit card companies for additional financial advice.

Take control of your credit card debt with our tried and tested strategies for reducing debt. 

Five Strategies to Tackle Your Credit Card Debt

Some people make the minimum repayments on their credit card each month, and sometimes that’s all they can afford, but this approach will take much longer to repay the total balance. 

Here are the top five strategies to help you pay off credit card debt faster:

  • A debt consolidation loan: if your debts are across various credit commitments, you can merge them into one loan.
  • A balance transfer credit card: allows you to move debt from your existing credit card to another credit with a lower interest rate.
  • The snowball method: by paying off the smallest amount first, you work through your debts until they are all paid off.
  • The avalanche method: is paying off the debt with the highest interest rate first, and paying off your debts from highest to lowest.
  • A debt management plan: is an agreed repayment plan between you and your credit card providers.

So, let’s jump right in and explore how these ‌methods help pay off credit card debts. We recommend choosing the strategy that fits your financial situation the best.

1. A Debt Consolidation Loan

A consolidation loan is a good option for tackling more expensive debt across multiple credit commitments. 

The loan allows you to borrow the total amount of your debt and pay it off in one go. This strategy is ideal, as instead of paying out to multiple creditors, you’ll only be paying back one company.

Before taking out a consolidation loan, you should consider the following:

  • Eligibility: each lender has requirements, such as some lenders won’t lend you large sums of money if you have a low credit rating.
  • Upfront costs: some lenders charge fees, such as annual fees, a balance transfer fee, loan origination, and closing costs. You may find yourself paying much more than the balance of your original debt. 
  • Higher rates: some consolidation loans have a higher interest rate than your credit card.

If your credit card debt isn’t high, try one of the following strategies.

2. A Balance Transfer Card

The clue is in the name; balance transfers allow you to move an existing credit card balance to another card with a different credit card provider.

The main perk of a balance transfer is that you take advantage of ‌a much better interest rate. Most providers will offer great introductory interest rates. So, it’s always a good idea to look around for who has the best promotional offer.

Before you make any balance transfers, consider the following:

  • Fees: ensure you read all the fine print to avoid hidden fees. 
  • Charged interest: finding a credit card with less interest than your current card is the purpose of this method.
  • Balance: the new card’s balance needs to cover ‌all original debt.
  • Eligibility: if your debt is high, you may not be eligible for another credit card.

This method works great for many people. However, some people like to avoid adding more cards to their wallets. Great news, other strategies don’t include getting another credit card. 

3. Debt Snowball Method

This debt reduction strategy is easy to implement, and it allows you to tackle your debt at a much more manageable pace and focuses on your mindset and behaviour.

Approaching your debt from the smallest balance to the highest allows you to feel great about tackling your debt as you reduce the number of debt accounts at a quick pace. Each time you eliminate a debt account, you’ll feel a rush of dopamine, which should motivate you to keep going until all debt is non-existent.

How to implement the snowball method in four easy steps:

1. List your debts from the smallest balance to the highest balance.

2. Make minimum payments across all your debt accounts, but leave out the smallest one.

3. Pay as much as possible on your smallest debt.

4. Clear all debt by repeating this process.

Some choose this method because it makes them feel better about their debt and leaves their most expensive debt last. Paying off large debts can take a long time and leave you feeling hopeless. So, when you pay off your smallest debt first, you immediately feel good about paying it off, and it feels like you’re making more progress. 

4. Debt Avalanche Method

The avalanche method is similar to the snowball method. But instead of paying off the credit card debt with the smallest balance, you begin by paying off the debt with the highest interest rate.

This method tackles the debts with the highest rating first (whilst still paying the minimum amount on all debts) and saves you the most money on interest. This method helps you become debt free the fastest. However, reducing the number of accounts with outstanding balances may take longer. 

How to implement the avalanche method in four easy steps:

1. List your debts from the highest interest rate to lowest, calculating the total amount owed, minimum monthly payments and due dates. 

2. Budget beyond your minimum payments. Make all the minimum payments across your debts, and then calculate how much extra cash you can afford to put towards the highest interest rate account.

3. Once you’ve paid as much as possible on your highest interest rate debt, use the same amount to eliminate the debt on the following account.

4. Clear all debt by repeating this process.

This method requires you to have additional money to put towards payments, and this isn’t always a viable option for everyone. A debt management plan may be the right strategy for you.

5. A Debt Management Plan

Paying off your credit card could be as easy as contacting your credit card company.

Together, you agree on a fixed amount to pay off your debts, and you’ll continue to make these payments until you’ve finished paying off your credit card debt. 

People usually use this strategy if they can only pay creditors a small amount each month or have short-term debt problems. Depending on how you approach this strategy, you can arrange an agreement directly with your creditors or through a debt management company for a fee.

This strategy allows you to discuss your debt with a professional, so it’s not just a burden on your shoulders. There are pros and cons of implementing a debt management plan:

Pros

✔️ Reduced monthly payments-these can be lower than your regular minimum payment.

✔️ Lower interest rates may be available for your repayments.

✔️ You’ll have more room to breathe where money is concerned.

✔️ Your credit rating should increase over time.

Cons

❌️ Creditors can still ask you to pay off your total debt later.

❌️ Some companies will charge extra fees, such as set-up and handling fees.

❌️ Creditors can take action to recover their money, even if you keep up with payments.

Now that you’re equipped with plenty of options to help you pay back more than the minimum amount on your credit card, you can begin to relax a little easier. Wait! Before you go, we want to give you some valuable tips on avoiding credit card debt again.

Helpful Tips for Using Your Credit Card After You’ve Paid Off Your Debt

It would be unrealistic to tell you to snap up your card and never use it again. Credit cards are helpful for emergencies and can be a great contributor to gaining a good credit rating. So, we’ve got some handy tips to help you avoid future struggles to pay off credit card debt:

  • Avoid overspending: budgeting money and not overspending will help you avoid credit card debt.
  • Note critical dates: look out for interest-free periods running out on your cards.
  • Avoid persistent debt: only spend what you know you can pay back at the end of the month.
  • Start paying back more: always pay back more than the minimum balance, and try to make repayments as soon as possible.

Now you’re set to reduce your debt and eventually say goodbye to that hefty credit card bill. Using one of these tried and tested strategies, you’ll no longer need to rely on credit cards, and you can enjoy life again by paying your regular bills with no worries about any minimum payments.

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