If you've gone mad with your credit card, ignoring your monthly statement will only make it worse. Tackle the problem head-on now and your card could be cleared sooner than you think - here's how.
If you have a January credit-card hangover, you’re certainly not alone; the strain of paying for Christmas and New Year can mean your wallet takes a heavier battering than usual.
Or perhaps you have an outstanding balance on your card which you’ve been meaning to pay for a while, but never quite got around to it.
Whatever your situation, now is a great time to clear your card for good - using these simple steps.
1. Stop spending on your card
Credit cards are easy to spend on but not so easy to clear – something you’ll be well aware of if you have an outstanding balance!
As such if you do have some clearing to do it’s essential you discipline yourself not to spend on your card any more, or you’ll just be undoing all your hard work.
Take the card you want to pay off out of your wallet and put it in a drawer so you aren’t tempted to spend on it when you’re out and about. Try to think of the card simply as a debt that needs to be paid off rather than a tool for spending.
2. Get a balance transfer card
Moving your outstanding balance to a credit card that offers a low, or no interest deal on balance transfers can help you to pay off your borrowing more quickly, particularly if your current card charges interest at a high rate.
You have two options here: you can either move your balance to an interest-free credit card where you’ll pay no interest on it for a certain amount of time, giving you the chance to clear it quickly without seeing most of your repayments go towards interest.
Or, you can move to a life-of-balance credit card where you’ll pay a low rate of interest until the balance is cleared completely.
Whichever route you take, you’ll be granted valuable breathing space to clear your card without worrying about building up too much interest.
Read our guide: Lifetime vs 0% balance transfer credit cards for help deciding which option best suits your needs.
3. Find spare money by budgeting
Drawing up a budget may not be your favourite thing to do, but if you have an outstanding balance on your credit card it’s a necessary and relatively straightforward step to take towards clearing it for good.
Writing up a list of your monthly incomings and outgoings will enable you to see exactly where you can cut back on non-essential spending. Any money that you can save this way can automatically go towards clearing your credit card balance, and help you pay more than the minimum repayment.
Read our guide: How to make a budget for help getting started.
4. Make use of your savings
If you have money in savings, consider using it to pay off your credit card once and for all.
While you may not like the idea of having an empty savings account, it will make financial sense to put your savings towards paying off your borrowing rather than having a savings account and outstanding credit card balance running concurrently.
This is because any interest on your savings is likely to be accruing at a far lower rate than that which is building up on your credit card balance. Once you have cleared your card borrowing you can concentrate on replacing your savings again – but this time you’ll have no extra debt to pay.
Take a look at our guide: Should I pay off my debts with savings? for more information.
5. Don’t make the same mistake again
When you reach that all-important day when you can say you’ve completely paid off your credit card, you’ll feel a huge psychological boost from working hard and achieving what you set out to do.
However, that hard work could all be undone if you begin totting up a balance on your card again and not paying it off, meaning you’re right back where you started.
If you are going to spend on a credit card, discipline yourself to clear the balance every month from now on so that you never fall into the same trap again.
