Start by recording each card’s balance, interest rate, minimum payment and payment due date. Include any arranged overdraft or other borrowing with a separate balance. The minimum payment usually covers interest and only a small part of the balance, so paying it alone can make repayment take a long time. For example, a £2,000 balance at 24% APR produces roughly £40 of interest in the first month before payments and daily interest calculations are considered. An app such as Updraft can bring connected balances, interest costs and payment dates into one view.
Calculate how much remains after essential costs, minimum payments and a modest allowance for irregular expenses. Set aside that amount for debt repayment every month, while continuing to make at least the minimum payment on every card. Keep a small buffer where possible, since an unexpected bill can otherwise lead to further borrowing. Review the plan after each pay rise, major expense or change in household income.
Two common methods are the interest-rate method and the smallest-balance method. With the interest-rate method, make additional payments towards the card with the highest rate first while paying the minimum on the others. This generally reduces interest most efficiently. With the smallest-balance method, clear the lowest balance first, then redirect that payment to the next balance. It can simplify the number of accounts more quickly, although it may cost more interest if the highest-rate card is left until later.
A balance transfer, personal loan or other consolidation arrangement should be compared using the total amount repayable, fees, interest rate, repayment period and any promotional end date. A lower monthly payment is not necessarily cheaper if it extends the repayment period. Before consolidating, confirm that the card balances will actually be cleared and avoid adding new spending to them. Update the plan when payments, rates or balances change, and record the expected month in which each account reaches zero. If minimum payments are becoming unaffordable, contact the card providers and a free UK debt advice organisation such as StepChange, National Debtline, Citizens Advice or MoneyHelper.