How To Pay Off Credit Card Debt

Are you worried about being in or getting into debt? I know I am. We have some debt including our mortgage, then some smaller personal loans and bits of credit card debt. And we’re not alone.

According to research, most people have some form of debt with 91% of all debt being property related and 9% being personal in the UK.

Paying off credit card debt, especially when it’s large, can be daunting, but it doesn’t have to reduce you to tears. Here are some ways to pay it off while still maintaining your quality of life.

Paying off credit card debt is important

This seems like a pretty obvious statement, but it’s true as living with any form of debt can put you under unnecessary stress.

Credit card debt if not paid off can affect your credit score. And your credit score is super important to show that you’re good at paying back the money, and ultimately decides if you can get future credit, and if so how much interest you pay.

Interest and fees can quickly mount up if you don’t clear your credit card debt. And when this happens it’s easy to go into a downward money spiral and feel like you’re only paying off interest.

Clearing off debt is such a liberating feeling and it will free up cash for other savings and investments, or to spend.

Start by assessing your debt

Before you do anything else review all of your debt. You’ll want to know how much you owe across credit card debt and other forms of debt. Alongside the total owed note down the minimum payments owed each month and the interest rate.

Have this information in a digestible and easy-to-access way. I’d suggest digitising it through a Google Sheets or Excel doc as opposed to on a scrap of paper. This way you won’t lose it and can easily update it when you review it in future months.

See if you can combine your credit card debt

This may not be an option for everyone (especially if your debt is high), but see if you can open a brand new credit card with 0% interest that you can do balance transfers on.

By doing this you can combine multiple smaller pieces of debt into one space. And you may avoid paying interest.

Set a realistic repayment goal

Once you know what your minimum repayment is you can work out how much above that you can go in order to clear off your debt.

It’s important to choose a realistic goal that you’re more likely to stick to. You may want to put a large amount down leaving no room for spending, and then if you do spend even a little it can be frustrating or discouraging.

Find a balance between achievable and stretching. You want to be able to clear your debt as quickly as possible.

Revise your budget to account for your credit card debt repayment

It’s so important to have a budget, but it’s imperative to have one if you’re in the process of paying back debt.

Knowing what money you have coming in and where that money needs to go will help you plan your finances. Your budget should include all fixed expenses such as your rent or mortgage, household bills, food and necessary spending.

When you are paying off a debt you should know where all of your money is going. And having a realistic budget will help you stay out of additional debt.

Cut back your spending

When you’re putting together your budget chances are you’ll need to cut back on expenses.

Evaluate what you’re spending and identify areas where you can save money. For example, you may have two TV subscriptions and by cutting one out you’ll save some money.

I save money on our food shop by meal planning. Doing this means I know exactly what we need for the week, and if I pick up something discounted to freeze I can factor it into next week’s menu.

For me, I spend a lot of money on books, and I know if I had to I could cut this off and use the library more.

Use the avalanche method for credit card debt

In a nutshell, the avalanche method is paying back debt with the highest interest rate first. By doing this you’ll save the most money in the long run as you’re paying off expensive debt first. This is a great method if you have multiple different credit cards to pay off.

You’ll want to ensure you always pay the minimum payments of all cards. But any extra money can be concentrated on the highest interest card. Once that’s paid off you can move to the next.

Have a debt repayment plan

Between assessing your debt and having a budget you can create a debt repayment plan.

Having a plan of when each debt will be paid off will make it seem more achievable and help you to celebrate goals when a debt is paid off. You can use a debt repayment calculator to help. This one is in dollars but you can ignore that, it will allow you to add multiple debts at once.

Increase your income

This may seem simple but if you increase your money in you can pump more money into paying off debts. You could try and get a raise in your current job, or take on an additional part-time job to make some extra cash.

If taking on an extra job isn’t feasible look into making money by freelancing or selling items on Vinted or eBay.

If you get any additional money in such as a bonus, gift, tax refund etc, use it to pay off debt first. It’s money you weren’t expecting so you won’t miss it.

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