How to pay off credit card debt: top tips and help

Credit card debt can be worrying and quickly spiral from a small amount to a sum you simply can't afford. 

But if it's something you're struggling with, you're not alone and shouldn't feel ashamed. 

There are many ways to take control of your credit card debt and get your finances back on track. 

Keep reading to get insight into the background and causes of credit card debt, along with helpful tips on how to pay it off.

What causes credit card debt? 

Credit card debt is often stigmatised as the product of frivolous spending or poor money management, but the data paints a different picture. 

Statista found that 'lack of budgeting' was way down in fourth place in terms of reasons people accumulate debt, while reduced income and unemployment/redundancy both took the top spot, with injury or illness a close second.  

How common is credit card debt? 

If you're struggling with credit card debt, you're certainly not alone. 

27 million people in the UK have debts, with five million owing more than £10,000 in loans and credit. 

Research by money.co.uk found that 35-40% of UK adults are regularly using means such as a credit card simply to cover unavoidable household expenses. 

The rate of borrowing has also been on the rise since 2012, and it has been rising faster than the rate of income increases since 2015.  

Sadly, credit card debt can disproportionately affect those on lower incomes, as they have less of a safety net to cover unexpected expenses.

The Office of National Statistics found that low-income families have an average of just £95 in savings, while those classed as high income have around £62,885.  

Why is credit card debt hard to pay off? 

Unplanned credit card debt can be tricky to escape for several reasons, but the main one is that it can put you in a cycle of debt. 

A Citizens Advice report found one in five people struggling with credit card debt had their limit increased without asking for it.

Average credit card debts

To try and meet the most urgent repayments, people are likely to continue borrowing, taking on an average of £1,506 in debt. 

So, if you feel like your credit card debt is something you'll never shift, it's certainly not surprising. But there are ways to get back in control of your finances.  

Good credit card debt vs bad credit card debt 

Credit card debt isn't something to be terrified of. Using your credit card in a sensible, moderate way and making sure you stay well within your limits is one of the easiest ways to boost your credit score.

So how can you tell the difference between 'good' credit card debt (known as managed debt) and 'bad' credit card debt (known as problem debt)?

Here are a few pointers: 

Managed debt: 

1. Is well within your credit limit – the experts say keeping your utilisation below 30% is ideal  

1. Is an amount you could pay off very quickly if needed 

1. Comes with a very low-interest rate – ideally 0% 

1. Has been accumulated mindfully – to cover a large, essential purchase where a credit card affords you extra financial protection, for example.  

Problem credit card debt 

1. Has a high-interest rate, meaning the amount you owe continually rises 

1. Is far higher than the sum of your savings 

1. Is being used as a financial crutch regularly 

1. Isn't planned or budgeted for 

Has Covid-19 increased the UK's credit card debt? 

Some people have saved more during Covid-19, as working from home and no costly socialising or foreign trips has greatly reduced outgoings. 

The Bank of England found that the average household accumulated £7,000 in savings since the start of the pandemic. But that's not the case for everyone.  

The pandemic has tightened the pressure on those who are living payday-to-payday or close to.

Redundancies, furlough and higher bills from being at home have created a perfect storm for financial troubles, as they have reduced income and pushed up outgoings simultaneously. 

Many people have had to continue travelling to work, find the money for childcare and feed extra mouths that free school meals would usually cover.  

According to The Money Charity, a December 2020 survey found that a staggering 8.9 million people had borrowed more money due to Covid-19. 

The average credit card debt per household was £1,938 in May 2021.

So, that's some helpful background information, but let's look into some tips on how to pay off your credit card debts next.

Five ways to help pay off your credit card debts 

1. Assess your situation 

Before you can take any action, sit down and work out exactly how much you owe, and to whom. 

Your debt may be spread across multiple credit cards, making it even harder to get an accurate picture of the scale of your debt. 

Understanding what you're up against will allow you to take practical action without the nasty surprise of a forgotten debt creeping up on you later.  

It can be scary to face it, but you shouldn't feel ashamed or burden yourself with judgement. 

Financial difficulties can creep up on you or come as the result of illness, redundancy or simply bad luck. 

Let's say your car is written off, which is your only way of getting to work, your house needs emergency repairs, and your pet needs emergency surgery.

You could easily rack up five figures of debt in a matter of days. And if you're already living on a tight budget due to high housing costs, one bad month can put you into a spiral of debt that you can't escape.  

2. Increase your monthly repayments 

Imagine that you have the average amount of credit card debt exactly. 

If you only make the minimum legal payments on a credit card with an average interest rate, it will take an estimated 24 years and four months to pay it off completely.

However, if you paid off a set amount every month (say £51), you could clear the debt in just five years and one month. 

If you're able to, it's a good idea to increase your monthly repayments, which will help to clear your debt a lot quicker. 

Even a modest increase could help you make a good dent in your debt and put you on track to clearing it for good. 

3. Check your credit score 

A poor credit score will stop you from accessing the best rates on credit cards, loads and other more affordable financial assistance. 

Sites like Clearscore and Experian are free to sign up and offer handy hints and tips that will help you improve your credit rating. 

Experian also offers an 'instant credit boost' service, which can help you boost your score in minutes by adding things like subscription payments.  

4. Transfer to a 0% or low-interest credit card 

Even if you've been sensible about how you use your credit card, high-interest rates can see the amount you owe quickly snowball into an unaffordable sum.

The average representative rate in 2020 was 20.65%, rising from 18.67% in 2019, which can significantly increase how much you owe. 

Reducing the APR on your credit card will give you breathing space to tackle the balance without feeling like you're fighting a losing battle.  

5. Speak to a professional 

Many people with debts that have spiralled out of control feel too embarrassed, frightened or overwhelmed to speak to anyone about it.

They may also wrongly think that the issue will go away if they ignore it. If you're struggling with credit card debt (or any kind of debt), it is always best to speak to someone as soon as you can.  

Most credit card providers will be sympathetic and try to work with you on a payment plan to help you clear your debt. 

After all, it's in their best interests to be understanding, as it gives them the greatest chance of recouping what they've lent you. 

But if they're not helpful, or this sort of resolution has already fallen through, there are many other places to turn.  

Citizens Advice has lots of excellent guidance on how to manage credit card debt, whether you've just fallen into difficulties or are facing the prospect of court or bailiffs. 

Debt management charity Step Change should also be one of your first ports of call, as its knowledgeable advisors offer practical, judgement-free guidance on how to work towards resolving your debts.  

Take control of your debt 

Working with a financial advisor or accountant could help you cut your outgoings, come up with a sensible budget and help regain control of your debt.

If you're looking for a professional you can trust in your area, use Unbiased's handy search tool.

If this article is relevant to you, it might also be helpful for you to know more about financial coaching. What is a financial coach? We’ve got the answers.