There's more than one way to pay off your credit card debt. Whatever you choose to do, you could drastically cut down your interest payments and become debt-free sooner.
With a credit card, you decide how much to pay off each month.
You can choose to repay:
The minimum payment amount set by your provider
The full statement balance
A set amount you choose, e.g. £50, provided it's more than the minimum amount
If you pay your bill in full every month, you will not pay any interest on your credit card.
But if you want to pay off the balance quickly, try to pay off as much as you can each month.
Paying back more means you'll clear the balance quicker and pay less interest on your credit card.
Whatever happens, you have to at least pay off the minimum amount every month.
The minimum amount is set by your provider and is outlined on your monthly credit card statement.
It can either be a set monetary amount or a percentage of the balance, whichever is greater.
Since April 2011, the minimum amount must be at least 1% of the balance plus any interest or charges.
If you do not meet the minimum repayment, you could be charged a fine.
If you miss a payment altogether, you could:
You can pay off your credit card by:
Setting up a direct debit
Using your debit card to pay online or by phone
Paying in person if your provider has a nearby branch
Sending a cheque to your credit card provider
Transferring money from your online banking to your credit card provider
The benefit of setting up a direct debit is that you'll never miss a payment. To avoid going into your overdraft, make sure there's enough money in the account the direct debit is coming from.
For more details on the different options for making credit card repayments, here's how to manage your credit card.
You may be able to cut the interest you pay by clearing your balance in the following ways:
Using your savings
Getting a balance transfer card
Paying off the most expensive card first
Interest rates on savings are very low at the moment. As a result, the interest you pay on your credit card will likely be more than what you earn on your savings.
For example, if you owed £2,000 on a card with an APR of 17%, it would cost £340 in interest each year. If you had £2,000 in savings paying 1.25%, you'd only earn £25 in interest.
You could move what you owe to a cheaper card with a balance transfer credit card.
Many balance transfer cards offer a 0% interest period that can last more than 2 years. You could use this time to repay the balance without paying any interest.
Discover which balance transfer cards you're likely to get with our credit card eligibility checker.
If you have a few credit cards, pay as much as possible towards the card that is charging the highest rate of interest first.
To avoid paying missed payment fees, continue paying the minimum payments on your other cards.
Or, you could try consolidating your debts onto 1 card. It's easier to keep track of your payments that way.
Some personal loans offer lower interest rates than credit cards. So, it could be cheaper to get a loan to pay off your credit card balance.
But using 1 debt product to pay off another is not always the best strategy. That said, debt consolidation loans and balance transfer cards are designed for this purpose. Always compare the costs first.
Learn more about how debt consolidation loans work.
Find the best credit card for you, whether you're looking for 0% card for balance transfers or purchases or day to day spending and rewards