How to pay off credit card debt more quickly

Before tackling credit card debt, you need to understand what it’s made up of, how it increases over time and how to pay it off effectively. This is key if you want to pay off credit card debt as quickly as possible and avoid paying more interest than you need to. Here's what to work out:

• Total balance and interest rates. This is what you owe on each card and the interest rates you are being charged. Every credit card comes with an APR – this is an ‘annual percentage rate’ which is the cost of borrowing over a year (including interest plus any fees). The higher the rate, the more expensive any debt you rack up will be.

• Minimum monthly payments vs full repayments. Each credit card has a set monthly minimum payment – this is usually a small percentage of the total debt (so the payment amount may increase as the debt increases) or a set minimum amount, usually £5. You must pay AT LEAST the minimum amount each month – if you don’t, it’ll go down as a missed payment, incurring a fee and marking your credit file.
  
  It’s best to pay off IN FULL each month though, as just paying the minimum will take much longer to pay off and cost more in interest. So, set a direct debit for a fixed sum higher than the minimum. The only exception is if you've multiple debts, in which case this may not be possible for each credit card.
  

• The longer you borrow for, the quicker your debts grow. Credit card interest compounds, meaning not only do you pay interest on the original amount, you pay interest on the interest accrued. So the longer you owe money, the faster the debt grows.
  

Before anything else, you need to know where your money is going. This way you'll know if there's scope for you to pay off more of your debt. We'll tell you how, and share some helpful planners and calculators to help you along the way.

• Complete a budget. Start with our free Budget Planner, which will help you get a handle on your finances, including those unexpected expenses that can throw even careful planners off course.

• Reduce outgoings. Once you understand what you're spending, it's time to make some pain-free savings and get some quick wins. Check all your regular outgoing payments, such as monthly direct debits and standing orders, and ditch any you can – they could be apps, magazine or beauty subscriptions that you don't make use of anymore. You may even be able to get a refund for the time you've not been using it. See how to do it in Cancel direct debits.
  
  For heaps more ideas, take a look at our Money makeover – it WILL be worth your while to spend a bit of time on this.

If you’ve debts on multiple credit cards, here's how to do it step by step:

• Step 1. List all your debts. Take stock of your current situation and note down all your existing debts, including an overdraft if you have one.

• Step 2. Check your account(s) for existing-customer offers. Lenders sometimes offer special deals (either a lower rate or 0% for a set period) for transferring new credit card debt to your existing cards, though usually for a one-off fee. You can typically find these on your online account or by calling your card provider.
  
  It's important to note that eligibility depends on your credit score, current debt levels and available credit. If you’re already heavily in debt, you may not get the best deals.

• Step 3. Shift debts to the cheapest card. Move debt from your highest-interest card to one with a lower interest rate using a balance transfer card. If your credit limit isn’t high enough to move everything to one card, spread the debt across multiple cheaper cards.
  
  Look out for 0% balance transfer offers, as even a temporary break from interest can save you a lot – just make sure you know when the deal ends. Always factor in any transfer fees, as these can sometimes wipe out the savings. See our full Balance transfer credit card guide for more info and the top deals.

• Step 4. Repay the most expensive debts first – the most crucial part. Once all your debt's as cheap as possible, focus as much cash as possible on the most expensive debt first and just pay the minimum repayments on any less expensive debts. Once that's repaid, shift focus to the next highest-rate debt and so on. Continue this until you're debt-free.
  
  This is often called the ‘highest interest first’ method (aka avalanche method) and is usually the best way to pay off credit card debt.

The solutions above all involve you being in a functional relationship with your debt – in other words, you can afford your repayments and simply want to reduce your debts. But for some, a different tack is better – here are three questions to ask yourself.

• Do you struggle to meet minimum monthly payments?

• Is your total debt (not mortgage/student loan) over one year's salary?

• Do you have sleepless nights or depression/anxiety over debt?