Consolidating credit card debt – our top 5 tips

Written by PayPlan on 18 January 2019

Feeling blue after getting into the red over the festive period? Fear not, there are lots of things you can do about problem credit card debt to get you back on the path to financial freedom in 2019.

Assess your situation

The first step to tackling a credit card problem (or any form of debt) is to understand exactly where you are financially. It may have been tempting to bury your head in the sand up until now, but if you’re going to get on top of things, it’s time to be honest with yourself.

Dig out your bills and statements, make a list and total up everything you owe.

It’s also worth looking at the interest you’re paying on your credit cards, store cards and loans – this could be a considerable amount on top of how much you’ll have to pay back.

Stop spending now!

When you pay some of your credit card debt off, your limit is restored again and this could cause you to start spending again, as you know you have that safety net back. You could find you end up in a cycle of never actually paying anything off at all!

When you go out shopping, leave your credit cards at home so you can only spend what you have in your current account – or better still, be ruthless and cut them up.

Consider a debt consolidation loan

If you have outstanding balances across a number of cards, then the idea of consolidating them into a single monthly payment can seem like a good one. However, it’s worth doing the maths before you make any decision – interest rates on debt consolidation loans can be high, and you may end up paying back more than you would have done if you’d continued with your credit card repayments.

One of the biggest problems encountered with debt consolidation loans is that they do nothing to change the behaviours that got you into debt in the first place. Before you make a decision about taking out another loan, we would recommend seeking independent financial advice, and if you’re using debt consolidation as an easy way out (to avoid really looking at your budget), you may benefit from debt help and advice – find out the options available to you online now.

Transfer to a 0% interest credit card

There’s never been a better time to transfer any outstanding balances to a 0% interest credit card as there are some great New Year deals around. Santander introduced a new Everyday Credit Card at the start of 2019 which offers an interest-free balance transfer for 27 months with no fee! If you plan carefully, you could pay your remaining balance off without paying a penny of interest.

Another zero-interest deal is the Sainsbury’s Bank No Balance Transfer Fee Card which comes with a fee-free balance transfer length of 26 months. Do remember though, that these great introductory offers are normally only available to people with good or excellent credit ratings. Before deciding on the best credit card for your circumstances, it’s a good idea to compare a range of products. If your credit score is less than perfect, you may find you are only eligible for options with a higher APR and transfer fees – but it’s certainly worth checking.  (Please note: this information is correct as of April 2019.)

Learn to budget better

After all, prevention is the best cure! If you can get on top of your monthly spend each month then you may find that you can do away with the need for credit after all. Our advice is to download a decent budgeting tool like this one from the Money Advice Service. That way, you can fill out everything you’re spending on a regular basis, highlight areas that need some attention and see where you could cut back.

 

Remember, if you find that you are unable to manage your debts alone, it’s time to seek help. We offer free, impartial advice for every type of debt, with solutions including, but not limited to free Debt Management Plans (DMPs), Individual Voluntary Arrangements (IVAs), Debt Relief Orders (DRO), Trust Deeds and advice on bankruptcy. Simply complete our quick online debt solution tool today or call us on 0800 280 2816 and find out how you can become debt-free.


Filed under Money Management

This article was checked and deemed to be correct as at the above publication date, but please be aware that some things may have changed between then and now. So please don't rely on any of this information as a statement of fact, especially if the article was published some time ago.

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