How to pay off credit card debt: a complete guide

What happens if I don’t make my monthly credit card payments?

If you don’t make at least the minimum payment on your credit card bill, you can usually expect:

• To be charged a late payment fee (usually around £12)

• To be moved onto a higher interest rate

• A black mark on your credit report.

Keep missing payments and your credit score will quickly take a dive.

If you’re worried about repayments, help is available. Let your card provider know if you’re having problems and get free confidential advice from a debt charity such as StepChange or National Debtline.

When should I pay off my credit card?

There’s one golden rule here: always pay your credit card bill before the payment due date! You can usually find this on your statement, or by checking on your online banking site or app.

If you can afford to, pay off the whole balance straight away. By doing this, you won’t be charged interest on the amount you’ve borrowed (unless you've withdrawn cash using your credit card, which will usually incur interest from the moment you make the withdrawal).

If you can't afford to pay the full balance, you must make at least the minimum payment. It might also be worth making a plan to pay the remaining sum off in manageable chunks, too.

What’s the best way to pay off credit card debt?

At a basic level, using a direct debit, bank transfer or card payment is usually the simplest way to pay your credit card bill. But there are steps you could take that might make it quicker or cheaper to clear your debt in the long run...

Pay more than the minimum

If you only make the minimum repayments on your credit card bill each month, you’ll pay interest on the remaining balance (unless you have a 0% credit card).

Keep in mind:

• Repaying the smallest amount possible means it can take a long time to reduce your balance

• Paying more than the minimum can help you clear your balance sooner and prevent interest from stacking up.

Use our credit card repayment calculator to see how much you could save on interest by increasing your monthly repayments.

Consolidate your credit card debt with a 0% balance transfer card

If you're paying interest on debt spread across several different credit cards, it might be worth moving what you owe onto a 0% balance transfer credit card.

A 0% balance transfer credit card gives you a set time where you won’t be charged interest; in some cases, for up to 30 months or more. This gives you the chance to pay off your outstanding balance without extra interest building up.

But be aware that:

• There’s usually a fee for a balance transfer – often around 2-4% of the amount you move over.

• Once the interest-free period is up, you'll be hit with a higher rate of interest on anything you still owe. So it’s important to try to pay off the entire balance before the interest-free period ends.

• 0% balance transfer credit cards are usually only available if you have a good credit rating.

• You must make the monthly minimum repayments on time. A missed or late payment could result in fees and losing your 0% interest rate.

Learn more about how to transfer a credit card balance in our handy guide.

Prioritise high-interest credit cards

If you have more than one credit card, paying off the debt can feel overwhelming. Two methods you could try to tackle this debt are the ‘avalanche’ and ‘snowball’ methods:

The avalanche method

The avalanche method focuses on repaying debt on credit cards with the highest interest rates first, instead of the biggest outstanding balance. This might save you money on interest.

1. Make the minimum payments on your cards with the lowest rates of interest

2. Put as much money as you can afford towards paying down debt on the card(s) with the highest rates of interest

3. Once you’ve cleared the debt on the most expensive card, you move on to the next-highest interest rate card and so on.

The snowball method

The snowball method focuses on gaining momentum every time you pay off a debt.

1. Make minimum payments on all credit cards except the one with the smallest balance

2. Put any spare money you have towards reducing this card's outstanding balance

3. When this card’s debt is fully repaid, you then switch your attention to the card with the next-lowest balance and so on.

Whichever method you choose, remember that you must keep up the minimum repayments on all your other credit cards.

Negotiate interest rates with lenders

Although this isn’t a common option, you may be able to negotiate a lower interest rate with your lender. To do this, you’ll need to make sure you:

• Have a decent credit score

• Make your credit card repayments on time.

It also doesn’t hurt if you have a good, long-standing relationship with the lender.

If your interest rate is reduced by even just one or two per cent, this could add up to considerable savings.

Pay off debts before saving

While it’s wise to have a little bit of money set aside for emergencies, consider focusing on cutting as much of your debt as possible before saving towards a holiday, for example.

Imagine you owe £5,000 on a credit card at an APR of 20%. Instead of earning 4-5% a year in a new savings account, it could make more financial sense to prioritise clearing your card debt instead.

This way, you’ll avoid the high APR (annual percentage rate) charges that typically come with credit card debt.

What our expert says...

"Credit card debt can build faster than many people expect because convenience tends to hide the weight of carrying a balance month after month. Progress often comes from a steady plan and a clearer view of spending, rather than trying to fix everything at once."

Charlie Evans, Personal finance expert

Six top tips on how to reduce credit card debt

1. Leave your credit card at home so you’re not tempted to splurge while you’re out and about. And avoid online shopping sprees that you haven’t budgeted for.

2. Be savvy with low introductory rates. A card with 0% or very low rate on purchases can be useful. But this kind of card only works if you can clear the balance before the higher interest rate kicks in at the end of the promotion.

3. Set up a direct debit, so you never miss a monthly payment. If you can, set it up to pay more than the minimum amount each month.

4. Don’t use your credit card to withdraw cash. You’ll be charged a higher interest rate plus additional fees, and could damage your credit score.

5. Remember your credit limit is just that – a limit, not a target. It’s all too easy to see your credit card limit as money you actually have. But remember it’s borrowed money that you'll have to repay. Aim to keep your balance as low as possible.

6. Limit the number of credit cards you have. While there can be benefits to taking out separate cards for different types of purchases, each new credit card application leaves a mark on your credit report. This can make lenders more wary when you apply for other types of credit such as a personal loan or mortgage.

Looking for a credit card?

If you’re thinking about consolidating your credit card debt, comparing balance transfer cards from some of the UK’s most trusted providers might be a good idea. When you compare credit cards with us, we’ll only show you cards you’re likely to be accepted for and it won’t impact your credit score.