The simple tricks to repay debt quicker

3 min Read Published: 15 Dec 2023

The 5 simple steps to clear your credit card debtThe secret to paying off debt quickly and effectively is to try your best to automate the process so your debt is being reduced with minimal input from you once you have set things up.

The best way to clear your debt quickly

1) Make sure you have quick access to the following:

  • statements for any savings accounts you have
  • your most recent credit-card statements for every credit card on which you have debt
  • internet access and your online passwords for your banking and credit cards

2) Add up your total savings

3) Now grab your credit-card statements. Make a list of the outstanding balance, interest rate and minimum monthly payment for each of your credit cards, with the highest interest rate at the top and lowest at the bottom. All this information can be found on each credit-card statement.

4) Total up your outstanding balances and your minimum monthly payments.

Clear debt with savings

If you have any savings then use them to pay off debt starting with the credit card with the highest interest rate and working down to the one with the lowest. Saving money while you have credit-card debt is madness! You are getting virtually no interest on your savings but paying out huge amounts of interest to your credit card company. You are not only losing money but effectively paying to save. Stop now and get your priorities sorted. If you have internet banking, great, you can clear some of your debt in a few clicks. Do it now. If you don't have internet banking then write the relevant cheques and post them.

The best repayment plan (snowballing)

  1. Make sure all your credit cards are set up to be repaid by direct debit each month. This ensures you never miss a repayment, which will not only protect your credit rating but also help take the strain out of juggling all those debt balls.
  2. Make sure all the direct debits are set up for the minimum monthly payment except the one with the highest interest rate.
  3. The direct debit for the top interest-bearing credit card should be set at the maximum you can afford. If you are serious about ending your credit-card nightmare then put every spare penny you've got into clearing this debt fast.
  4. Once you have cleared the balance on the first credit card just repeat the same process on every card down the list until you are free from credit-card debt.

Stick to the plan

Repaying your credit card debt will take time. Work out when you think you’ll be credit card debt-free and put this date in your diary. Always remain focused on this goal. It may seem daunting, but paying debt is like driving over a long bridge - you stay in lane and keep hold of the wheel. If you veer off course then it will be a disaster. Drive steadily and before you know it the other shore will come into view and then it's downhill all the way.

Cut up your credit cards

If you’ve racked up a huge debt pile already then you need to be honest with yourself about your lack of control when it comes to spending. Like a recovering alcoholic you need to get rid of temptation, in this case by cutting up your credit cards. Trust me, as someone who has gone through this, the sense of release and control feels better than any shopping buzz, as does the ability to sleep at night once again.

For those wanting to take their repayment plan one step further, they should look to reduce all the interest rates they’re paying on as many credit cards as possible, preferably to 0%. Our article about the best 0% balance transfer credit card deals will help you do this. Also if you have any loans make sure you shop around for the best deal.

Another easy way to clear your debt quickly

If the above method feels like too much hard work for you, there is an alternative method that can cut the time it takes you to repay your debt significantly and save thousands of pounds in interest.

The way credit cards work is that people will typically pay the minimum monthly amount which is a percentage of the overall amount of money they owe. When people pay only the minimum monthly payment most of that payment is paying the interest on the debt with only a small amount actually going towards clearing the debt. So over time as you continue to pay the minimum monthly percentage your debt reduces slowly along with the size of your minimum monthly payment. This significantly increases the time it takes to clear your debt.

For example, the average credit card debt in the UK is £6,400 at a typical APR of 17.43%. If your minimum monthly payment was £150 it would take you 33 years and 4 months to clear the debt. However if you simply phoned up your credit card company and asked them to fix the amount you pay back to an affordable amount (in this example £150) and instructed them not to reduce the payment as your debt reduced you would pay off the debt in just 5 years and 4 months saving you £5,259 in interest. Watch our video "Become debt free sooner" for a fuller explanation.

So by simply telling your credit card company to fix your monthly payment to an affordable amount you will dramatically reduce the time it takes to pay off the debt and save a significant amount of money.