Reduce Your Credit Card Debt
Top tips to reducing or clearing your credit card debt more quickly
Move Your Debt to a Lower APR Card
Again, if you hold more than one card, you can use your cheaper cards to clear or reduce the debt on your higher APR cards. This means you will be paying less interest overall, meaning a bigger proportion of your repayments goes towards reducing your debt rather than paying for it. Over time your total debts will be reduced much more quickly.
Low Interest Cards Compared:
| Card | Standard Rate | Comments | |
|---|---|---|---|
| Intelligent Finance Flat Rate Card | 8.9% | No-nonsense permanently low rate for both purchases and balance transfers | Apply Online >>> |
| Co-operative Bank Fixed Rate Visa | 9.9% | Apply Online >>> | |
| Virgin Shopping Card | 10.9% | A low-interest card with reward points, aimed at shoppers | Apply Online >>> |
Make Use of Balance Transfer Deals
One of the best ways of reducing your debt is to move it to a card offering a balance transfer offer. Many cards will give you an introductory 0% rate on transfers for a certain number of months, others will offer you a fixed low rate that lasts for the life of the balance (i.e. until you've paid it off). In either case, you'll end up paying less interest than if you kept the balance on your existing card, attracting interest at its standard rate.
This of course means that your repayments will be paying off more of your balance and less in interest, so clearing your debt quicker.
Balance Transfer Offers Compared:
| Card | Balance Transfer Rate (APR) | Intro Rate Period | Standard Rate | |
|---|---|---|---|---|
| Capital One Platinum | 0% | until 1st October 2009 | 12.9% | Apply Online >>> |
| Virgin Card | 0% | for 15 months | 15.9% | Apply Online >>> |
| Barclaycard Flexi-Rate | 0% | for 14 months | 14.9% | Apply Online >>> |
Debt Consolidation
One 'solution' to card debt that many people use is a debt consolidation loan. This involves taking out a loan which you use to clear all your card debts, and maybe other expensive debts such as overdrafts. As you should be able to get a lower rate loan than the rate you're paying on your cards, this can be an effective way of clearing debt.
While this may take the pressure off, and make life simpler by having only one repayment to make each month rather than many, you may well end up paying more in interest over the long term. This is especially true if a bad credit rating means you can't get a low-APR loan.
Low Rate Loans Compared:
| Lender | Typical Rate | Minimum Amount | Maximum Amount | Comments | |
|---|---|---|---|---|---|
| Masterloan | 6.8% | £1000 | £25000 | Fixed repayments and no admin fees | Apply Online >>> |
| The AA | 7.2% | £1000 | £25000 | Higher rates apply for loans of less than £5k | Apply Online >>> |
| Sainsbury's Loans | 7.3% | £1000 | £25000 | Nothing to repay for 3 months, instant decision | Apply Online >>> |
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