4 easy ways to clear your credit card debt | Millennial Money

5 min Read Published: 13 Oct 2021

In this week's millennial money episode, Damien Fahy and I speak about the top ways to pay off credit card debt.

How to clear credit card debt

Damien says...

Tip 1 - Always pay more than the minimum

Only paying the minimum on your credit card each month could mean you are paying your credit card off for a number of years. Paying more than the minimum can drastically reduce the length of time spent paying off your credit card and we explain this in the following example. 

Take an average amount of credit card debt such as £6,400 with an average interest rate of 17.43%. Using this example, if you only paid the minimum repayment each month (starting at £150 per month, then reducing to £149 the following month and so on) it would take you a whopping 33 years and 4 months to clear your credit card.

However, if you fix the monthly repayment amount at £150 (assuming you can comfortably afford this each month) you will clear the balance in just 5 years and 4 months, plus you'll save over £5,000 in interest!

Tip 2 - Prioritise debt

Most people have debts that are spread across multiple credit cards and that's just life, there's nothing wrong with that and we shouldn't make people feel bad about it. What you need to do to repay your debt quicker is organise your debt in order of priority, with the highest interest rate at the top of the list and the lowest interest rate at the bottom. 

The easiest way for you to do this is:

  • Make a list of the debts in order of priority.
  • Work out your monthly budget for paying off the debt. 
  • Set up minimum payment direct debits for the lowest priority cards 
  • Set up a direct debit to pay the most off on the highest interest rate cards (within budget) 

Once you have cleared the highest debt you can then apply that amount to the next credit card on the list. As you work your way down the list it creates this snowballing effect. You're tackling all of your debts at once and paying less interest at the same time. Make sure that you set up a direct debit for each to ensure you do not miss any payments as it could impact your credit score. 

Tip 3 - Budget

Looking at how you spend your money each month is a great insight into seeing where your money goes. Categorising your spending opens your eyes to purchases that you may need to cut back on and helps you to budget effectively to tackle any debt you may have. 

Apps such as Emma and Money Dashboard help you to manage your bank accounts without opening new ones. Whereas, apps such as Monzo and Starling Bank are app-only banks that help you budget your salary and track your spending. Check out our article How to manage your finances and what you should focus on first.

Remember: If you can't quantify it you can't control it.

Tip 4 - Do a balance transfer 

A final tip is to do a credit card balance transfer. A lot of people don't realise that you can transfer your current credit card balance (or balances) to another credit card with 0% interest. This allows you to avoid paying all of the high-interest fees for a period of time whilst you try to clear the debt.

For more information see our article: "How to do a credit card balance transfer in 5 minutes" or check out our video "How to clear debt with a 0% balance transfer". 


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