9 min read

Juggling credit card debt

Faith Archer
6 February 2017

Built up debts across a few different credit cards? We’ve put together a list of 6 things to think about that might make your unmanageable debt feel more manageable again.

Borrowing money on credit cards can cost a lot if you are juggling several balances. The extra interest every month soon adds up. Multiply that by several cards, and the total keeps getting bigger. If your payments only just cover the interest, it’s very difficult to make a dent. Here are 6 things to think about to help get your credit card debt back on track.

1. Work out how much you owe and consider paying the most expensive debt first

A great starting point is to make a list of everything you owe. Think about credit cards, store cards and also any overdrafts, because overdrafts on your current account are often more expensive than credit card debt.

For each one, write down the current balance, the interest rate - known as the Annual Percentage Rate (APR) - and your credit limit. If you’re on any introductory offers, check when they finish and what the new interest rate will be afterwards. Think about repaying the most expensive debts first to avoid your debt building up further.

Helpful hint
Remember, if you have savings earning less interest than you pay on your debts, weigh up whether to shovel over your savings to pay off your cards. The quicker you clear your debts, the less interest you will pay, and the quicker you can start saving again.

2. Make your minimum payments

Credit cards quickly become expensive when you fail to make the minimum payment each month – so if you can, make sure you get that minimum payment in on time. If you’re struggling to keep track of all your minimum payments think about setting up a direct debit to pay at least the minimum payment each month.

3. Think about switching to a lower rate card

Now you know how much you owe, think about transferring the total balance to a balance transfer card with a lower interest rate. If you can’t get a credit limit to cover all of your debt on a balance transfer card, think about moving over the debt that is costing you the most.

By moving money to lower interest rates, you could clear your balances quicker, because more of your monthly payments go towards paying off your debt. However, make sure you read the small print. A 0% interest deal sounds great if you’re fortunate enough to get one, but some card companies may charge up to a 3.5% fee to transfer your balance.

If you want to learn more, take a look at our article on balance transfer credit cards.

Compare balance transfer credit cards on ClearScore

4. Think about trying for a cheaper rate on your current cards

If you can’t or don’t want to apply for a new credit card, you might still be able to cut costs using cards you already have. Interest-free deals are often only available to brand new customers. However, there’s loads of competition between card providers, so it could be well worth giving your card company a quick call. Consider asking if they can offer you a better deal on the cards you already have. Explain you’re thinking of moving debt from more expensive cards elsewhere. If you’d like the space to switch balances from other cards, see if you can get a higher credit limit. If you can get a cheaper deal on a card you already have, you can move money around without applying for yet another new credit card.

5. Understand what makes a good credit card deal

When weighing up different deals, areas to check include:

  • What is the interest rate?
  • What is the fee for transferring a balance?
  • What is the credit limit?
  • How long does the lower rate last?
  • What is the interest rate after the deal ends?

Lower rates are better, and zero is usually best. If you look for longer deals, you will have more chance to pay off your balance before higher rates kick in.

However, watch out for any sneaky charges. Even an interest free credit card may still charge a fee to transfer your balance. If the fee is less than you are paying in extra interest on a more expensive card, it could still be worth doing. However, if it could take a long time to pay off you debt, be wary of lots of short balance transfer deals if you want to pay fewer fees.

Two tips before you apply for a new credit card

  • Check your credit report and make any possible improvements to your credit score to boost your chances of getting the best possible interest rate (Read our top 10 tips).
  • Use soft-searches to check your eligibility on credit cards before you apply. Applying for a credit card and getting rejected can be harmful to your credit score You can get an idea of which cards you are more likely to be accepted for, without affecting your credit score, on your ClearScore 'Offers'.

6. Try snowballing

If you’d like to clear your credit card balances quickly, one approach is called “snowballing”. This means paying the minimum on all debts apart from one, and then paying as much as possible off that one every month. Some people target the debt with the highest rate, whether it’s a credit card or overdraft. This will help save the most in interest payments. Others focus payments on the smallest balance, for the satisfaction of shifting one debt as quickly as possible.

Clearing your debt may start slowly, but it will get faster. As each overpayment chips away at more of the balance, next month less interest will be added, and your payment will make a bigger dent. Once you have cleared the first debt, you can take the money you no longer have to pay on the first debt, and add it to the payments on your next debt.

Just as a snowball gets larger and larger as it rolls downhill, you’ll be able to pay off your debts faster and faster each month, as you free up money to make larger payments. You could think about snowballing once you have arranged a cheaper deal, whether on a new or old card.

In a nutshell:
  • Moving debt to a lower rate, or interest free, card will cut your interest payments, so you can pay off your balance quicker.
  • Compare balance transfer fees to how long the special offer lasts, to see how much interest you could save.
  • Setting up direct debits for at least the minimum each month means you never miss a payment. If you miss a payment, you could lose any special offer and start paying higher interest straight away. It will also affect your credit record, making it harder to get good deals in future.
  • By focusing on overpaying one debt, you could pay it off quicker, and then add those payments to the next balance on the list.
  • Making a note of when any special offers end can save money. Setting a reminder a couple of months before gives you the chance to either clear the balance, or transfer the money elsewhere, before the rate jumps up.
  • If you transfer a balance to a new card, try to avoid spending on the old card. You could end up with bigger debts than you began with.
  • If your debt is becoming unmanageable, think about contacting a debt charity such as Step Change for free debt advice.
by Faith Archer

Faith Archer is an award-winning journalist. She's written about personal finance for over 14 years, and has worked for many of the UK's biggest newspapers. Faith has brought along her expertise to write this article especially for ClearScore.

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