How to pay off your credit card debt

Emma Nunes-Vaz
July 1, 2022

If you're with struggling with credit card debt, you may be feeling overwhelmed and unsure of where to start. We've put together some simple steps you can use to take back control of your credit card debt:

1. Understand your current finances

It can be really uncomfortable to log in to your online banking account and face the music! However, this is the first step to getting a hold on your credit card debt and taking control of your finances.

Find out your balances across all your cards, how much of your available limit are you using? If it's above 50% this can sometimes impact your credit profile so understanding this will inform you which cards to use (or avoid if you can). 

2. Find out what interest rate you're paying for each card

Finding out what interest rate you are paying is often annoyingly difficult. In fact, in a recent survey, we found that 92% of respondees had no idea how much interest they were paying each month…

You can usually find out what interest rate you are paying on your credit card statement either in the small print of the paper or pdf bank statement or online in your banking app. There are also multiple different interest rates attached to your card so understanding these helps you understand how much you will end up paying in interest each month.

 3. Make a budget

One of the first things you should do when trying to pay off your credit card debt is to create a budget. More specifically, look at what you’re using your credit card for. Subscriptions, for example, can be easy to lose track of and a good place to cut back. Doing an audit of your spending habits will allow you to see where your money is going and where you can cut back in order to put more towards your debt. 

4. Set up a payment plan

Set up a payment plan.. you can also use a calculator easily found online to find out how much time it will take you to pay. Our app does this and all the above for you automagically ✨ to help the millions of people in the UK to gain control of their finances. You can sign up for early access here.

5. Pay off the highest interest rate first

One of the many strategies you can use is to pay off the cards with the highest interest rate first. This will save you money in the long run as you will reduce the amount of interest you will pay overall.

6. Ask for help

You may need a second pair of eyes to check whether your budget is realistic or not. You can also get professional advice from a money mentor or financial advisor who can coach you through the process and help you to stay accountable. 

7. Consider a balance transfer

If you have a good credit score, you may be able to take advantage of a balance transfer. This allows you to transfer your debt to a new credit card with a lower interest rate, giving you more money to pay off your debt. For credit card transfers, you can try sites like USwitch or MoneySuperMarket.

8. Pay more than the minimum

Whenever possible, try to pay more than the minimum payment on your credit cards. This will help you pay off your debt quicker and save you money in interest charges.

9. Make extra payments when you can

If you have extra money come in, whether it's from a bonus at work or a tax refund, put it towards your credit card debt. Making even a small extra payment can help you pay off your debt quicker.

10. Diarise when your interest will go up 

Many credit card companies offer 0% interest on both balance transfers and purchase for a certain amount of time. A very common error is not knowing when your 0% interest will run out and most of the time credit card companies won’t let you know that you are now paying interest. So set yourself a reminder to flag when your promotional rate is ending (aka when you will start paying interest on balance transfers and purchases). 

One of the most important things to remember when paying off your credit card debt is to stay disciplined. This means sticking to your budget and payment plan and not using your credit cards for unnecessary purchases. With a plan and perseverance, you can get out of debt and start a fresh, financially.

FAQs

How do I find out how much interest I’m paying on my credit cards?

You’ll need to log into your account and find your bank statement, you’ll then be able to see the interest rates you’re paying in the small print…which is cheeky we know!

How do I pay off my credit card debt quickly?

 

It’s not always possible to pay off your credit card debt quickly but the below steps and advice in this blog will help you to speed up the process. Here are some additional tips to help you pay off your credit card debt as quickly as possible:

1. List your debts from smallest to largest

2. Make a list of all your expenses and see where you can cut back

3. Negotiate a lower interest rate with your credit card company

5. Lean on tech to take the strain like a budgeting app to track your spending and Incredible’s debt management app

What happens if I can’t pay back my credit card debt in time?

If you don't pay the minimum payment your account will go into arrears. If this happens, the lender might contact you to demand missing payments are made, or they ask for it in writing before taking any other action on their end; if not satisfied with what's given then there can be serious consequences like having an account defaulted which means loss of important rights like credit history!

What is an APR on a credit card?

APR stands for Annual Percentage Rate and is the interest rate you are charged on a credit card. The APR can be variable or fixed, depending on your credit card agreement.

You should always read the terms and conditions of your credit card agreement so you understand all the fees and charges that come with the card.

Whilst the above may seem overwhelming, it will help you save money on interest fees and help you get back on track to a debt-free life. Instead of doing it all manually, sign up to the Incredible app and we’ll do the hard work for you!  

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