Transferring the debt via a balance transfer
Some credit cards let you transfer the balance from another card. Transferring a debt from a card with a high rate of interest to one with low or 0% interest could help you pay off the debt faster.
But low or 0% interest credit cards are hard to get if you don’t have a good credit rating. This means you can’t rely on balance transfers as a way to deal with your credit card debts.
Also look out for fees when transferring a balance. Most credit card providers charge 2-3% of the amount you’re transferring as a one-off fee. If you’re transferring a balance to take advantage of a lower interest rate, the fees may mean you save less than you expect.
If you do transfer a balance, make sure you cut up the old credit card and close the account. Otherwise, you may be tempted to keep spending on both cards and you’ll end up with two debts.
Frequently asked questions
How do you pay off credit cards?
There are different ways to pay off a credit card. Before you start, it’s recommended that you stop using the credit card you want to pay off. This means the amount you owe will stop growing, making it quicker to repay.
Options for paying off your credit card balance include:
- Making a budget to find out if you can make savings in any areas of spending, freeing up some money to increase your credit card repayments. This will also reduce the amount of interest being added.
- Transfer the balance to a zero percent interest credit card and then make regular payments to pay this off
- Take out a consolidation loan, if you can afford the repayments, to pay off the credit card balance. If you’ve got a bad credit history, you might find it difficult to get a loan with an affordable interest rate
If you’re struggling with your credit card repayments and other regular bills, get free advice.
Is it better to pay off a credit card in full?
It depends on what you can afford to do.
Paying off your credit card in full will mean you pay much less in interest and charges, which can save you a lot of money.
But, this might not be the best option for you, if the only way to pay off your credit card in full is to either:
- take out more credit you might struggle to repay, or
- make big cutbacks on your monthly spending
It might be better for you to pay off your credit card more gradually if:
- You have a bad credit score, meaning new credit may be expensive to get, due to the higher interest rates
- You can only afford to pay off the card in full by cutting back on payments to priority bills or essential household living costs