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Paying off credit card debt
The longer you carry a debt, the higher your overall borrowing costs may be. The question is, how do you pay off credit card debt as quickly as possible?
Help with credit card debt
Five ways to take control of debt
The following strategies could help you to maintain focus and pay off your credit card debt.
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This method could be useful if you have multiple credit cards or loans to pay off – aiming to tackle your lowest balances first.
How it works:
- Make sure you make the minimum payment on each of your accounts.
- Pay any extra towards the account with the smallest remaining balance first.
- Continue doing that until all your debts are repaid in full.
As your balances start to dwindle, the more money you’ll have to tackle your remaining debts… a snowball effect, if you will. Seeing your balances reduce should also motivate you to keep going.
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This method aims to tackle balances with the highest interest rates as a priority.
How it works:
- Make the minimum payment on each of your accounts.
- Pay any extra towards the account with highest interest rate first.
- Continue doing that until all your debts are repaid in full.
The avalanche method could help you to cut your overall borrowing costs. It’s important to stay motivated and results will follow.
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If you have multiple credit and store card balances, you could move them all to a single credit card with a balance transfer. With everything in once place, your payments may be easier to keep track of. But also, you could cut your borrowing costs if you move balances from a higher to a lower interest rate.
It’s important to know that you can’t transfer balances between Lloyds Bank credit cards. Also, transfer fees usually apply, so do your sums to make sure a transfer is worthwhile.
Although you can request a transfer on most credit cards, you might like to consider a new balance transfer credit card. That way, you could take advantage of an introductory or promotional interest offer – often at 0% or a low rate for a fixed time. Always remember, credit is available subject to status.
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If you have a range of balances on things like credit cards, loans, overdrafts, and so on, you might consider a debt consolidation loan. Again, remember that credit is available subject to status.
The structured nature of a personal loan could benefit you in several ways. If the interest rate is fixed, your loan repayments will be too, making it easier to keep track and understand your borrowing costs.
You can select a loan term to suit your budget and needs. At the end, providing you’ve made all the required payments, everything will be paid off.
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It may seem simple, but with a Direct Debit in place, you’re less likely to miss a payment and incur additional charges. At least not because making a payment slipped your mind.
Once in place, due payments will be collected automatically from your selected bank account.
With Lloyds Bank you can set up a Direct Debit to collect:
- Just the minimum shown on your monthly statement.
- A fixed percentage of your balance, from 2.5% to 99%.
- A fixed amount set by you.
- The full statement balance.
To prevent you falling behind, we’ll always collect at least the minimum payment, even if the amount/percentage you set is lower.
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