How to clear your credit cards

Depending on your circumstances using up all of your savings to pay off your debt may not be the most sensible move, as you may need to have some money behind you in case you get ill, lose your job, or simply have an unexpected expense, like the boiler going wrong. So it can be a good idea to hang on to some cash, just in case.

It is usually recommended that you keep around three months' salary in the bank as a cushion. Make sure this money is working as hard for you as it can though, put it in a high-interest savings account, and then watch to make sure the rate remains competitive.

The alternative is, of course, to put all of your savings towards clearing your debts but making sure that you have access to an affordable credit facility - a low-rate credit card or an overdraft for instance - that you're able to draw on should the need arise. If you're paying a considerable amount of interest on your debts, this is an option definitely worth considering as it's likely to be a better use of your money in the long run.

Consider how much you have in savings, whether you have any big expenses coming up that you should hang on to some spare cash for, and decide how much you want to put towards paying off your debt.