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If you’ve started 2025 with a resolution to pay off your credit card – or, at least, reduce your debt – you’re in good company. According to data from YouGov, 29% of Britons have made some kind of financial New Year’s resolution, intending to improve their finances by saving more, spending less, managing their money more effectively or reducing their debt.
The Money Charity estimates that the average credit card debt per UK household stands at £2,534 and £1,333 per person. As a nation, this adds up to £71.9 billion, an increase of 5.84% in the year to October 2024. For most of us, it makes sense to tackle these debts before prioritising savings, particularly because it’s likely you’re paying a higher interest rate to borrow on a credit card than you can earn on your savings.
Here are three simple strategies to help you pay down your expensive credit card debt in the next twelve months.
1. Boost your repayments
You won’t make much headway in reducing your debt if you continue using your credit card. Once you’ve stopped spending, check your statement to find your minimum monthly payment – and then work out if you can afford to pay any extra on top.
This is important because, if you only make your minimum payment each month, you’ll quickly find yourself on a path to ‘persistent debt’. This happens when you have paid more on interest, charges and fees than you have cleared from your credit card balance over 36 months.
The good news is that increasing your monthly payment could save you hundreds, if not thousands, of pounds in interest – and, crucially, help you to pay off your credit card much more quickly.
Expert tip: “If you want to start paying off your credit card, work out where you can find some extra money within your current spending,” says Ed Fraser, founder of The Parent Money Coach. “For example, if you need to increase your payment by an extra £50 per month, you need to look at your outgoings and ask yourself the following three questions to see where you could cut back: Is there something you can cut out completely, like a streaming service, that won’t make a difference to your life? Can you reduce the frequency of some purchases, such as coffees or takeaways? Can you get more for less, simply by changing where you shop? Once you’ve found that extra money, set up an automated payment, either a direct debit or standing order, and you can start to pay down that card.”
2. Transfer your balance
Do you know your credit card’s APR? Our latest research found that 39% of Brits with a credit card had no idea of the current APR charged. If you don’t know, take a look at your statement to confirm how much you’re paying in interest and charges. Unless you already have a 0% interest or low-interest card, transferring your balance to a card with a lower APR is a simple and effective way to save on interest and pay down your balance more quickly. Many providers offer 0% interest balance transfer credit cards, although you will need to have a good credit score to qualify for the best credit card deals and the longest 0% period. However, getting this type of card is still possible if you have bad credit – and just a few months without paying interest could help you make significant inroads into clearing your debt.
Expert tip: “These cards offer interest-free periods, allowing faster repayment without additional interest,” says Ola Majekodunmi, founder of the online platform All Things Money. “These cards often come with transfer fees, and/or increased interest rates if the existing debt is not paid off during the promotional period.”
For this reason, before you set up a balance transfer, work out how much you would need to repay each month to clear your balance before the promotional period ends. Don’t panic if this doesn’t seem achievable – if you need more time, you could apply for a new balance transfer credit card just before the deal runs out, and shift your remaining balance.
3. Consider a debt consolidation loan
If you have more than one credit card, or would also like to clear an existing overdraft or loan, a debt consolidation loan could be a useful way to streamline your repayments, save on interest and pay down your debt.
However, this will only save you money if you find a loan with a lower APR than your existing debts. It can be a good option if you are tempted to spend on your card because it allows you to repay your balance in full and close your credit card account straight away, giving you some extra peace of mind.
Expert tip: “A debt consolidation loan can simplify your finances by combining multiple payments into one, often with a lower interest rate, helping you save money on interest and gain clarity (and much less stress and admin) on when your debt will be fully cleared,” says Fraser.
Before you go ahead, weigh up the pros and cons and think carefully about whether this is the right option for you. Majekodunmi adds: “This method may extend your current repayment time, and fees or higher interest might apply depending on credit score.”
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