How to reduce the cost of your credit and store card debt

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If you’re really struggling with your card bills, get free, confidential and impartial advice and support from a debt advice organisation. Paying the minimum amount each month makes it feel like the debt is affordable. But this can be a really bad idea.

Pay more than the minimum repayment

If you are on a 0% rate for a introductory period, paying only the minimum each month will make only small inroads into your debt - and when the interest-free period ends it can cost a lot to repay the balance even if you don’t carry on spending.

And if you took out your card before April 2011, the debt could actually increase.

Also, if you make only minimum repayments, this will show up on your credit file, and other companies might assume you’re struggling and will be more reluctant to lend you money.

This could even affect your chance of getting a mortgage.

Always try to repay as much as you can. Even if you only increase it by a small amount each month, it can make a huge difference.

Pay the most expensive card first

If you have store cards, they will probably be more expensive than credit card debts, so make sure you pay them off first.

Credit cards also charge different rates of interest. This will show on your credit card statement.

Out of all your cards, pay the most on the one with the highest interest rate first, depending upon what kind of balances you have on the card - whether purchases, balance transfers or cash withdrawals.

Make sure you pay at least the minimum payment on all your cards, otherwise you will incur charges.

Get a balance transfer card

If you have a good credit rating you might be able to move your current credit card balance to another credit card offering a low or 0% deal.

There’s usually a fee to pay for this of between 1.5% and 3% of the balance transferred, but it can be worth it as the following example shows.


Amount owed - £5,000

Monthly repayment - £300

Current credit card interest rate - 19%

Time to pay off debt using current credit card - One year, eight months

Cost of interest over that time - £772

New credit card interest rate - 0% (for 18 months)

Balance transfer fee on new credit card (3% of amount owed) - £150

Time to pay off debt using new credit card - One year, five months

Total interest saving by using 0% credit card (interest on 19% card minus balance transfer fee) - £622


Staying with the current deal means you would pay £622 in extra interest.

You need a good credit rating to qualify for the best balance transfer deals. If you have a poor credit rating find out how to improve it.

Work out how much you could save each month by switching using the Which? balance transfer calculator.

Top tips

  • If you switch to a 0% balance transfer deal, make sure you pay it off - or pay as much as you can before the deal ends.

  • Shop around by looking on websites or phoning different card issuers.

  • Ask the lender for a quote before applying. If they need to do a credit reference agency (CRA) check before quoting your APR, ask them to make a ‘quotation search’. This does not leave a footprint on your credit file, unlike an ‘application search’. Too many applications within a short period could suggest you are desperate for credit.

  • Don’t apply for a card before you know it’s right for you. Read all the information carefully, and compare interest rates and charges.

  • Close old card accounts and cut up cards to help you resist the temptation to keep on spending on them and so build up more debts.

  • When going for a 0% deal it’s vital to make a note of when the introductory offer ends. Aim to pay it off before then if you can.

  • Repay your cards with savings. Use your savings to repay expensive card debts unless you have more urgent priority debts. You might lose interest on your savings, but you will save much more in the long term. This is because you’ll pay far less interest on your debt.

With all your credit cards:

  • Make at least the minimum repayment every month, even if you have a 0% deal. Otherwise you’ll pay penalties and could lose your 0% deal. But pay as much as you can to stop the debts mounting up.

  • Set up a Direct Debit to make sure you never miss a payment. You can set it up for any amount you want, but make sure it’s more than the minimum repayment.

  • Read every statement and letter for important changes, such as an increase in your interest rate, and to check that all the spending is definitely yours.

  • Don’t use your card for cash withdrawals or credit card cheques. You’ll be charged fees and higher interest for the whole period until you pay it off.

  • If you have a 0% balance transfer credit card, avoid spending on it. Any purchases you make will usually not be included in the 0% deal offer. So you will be paying interest on those purchases if you don’t pay them off in full.

  • Don’t be tempted to start using the old card again – it might be best to close the old account and destroy the credit card.


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