Credit card debt

Paying off your credit card balance

If you have credit card debt and are only making the minimum monthly repayment, it can feel never ending. This is because the minimum repayment you make might be only a little higher than the interest each month so the amount you owe will reduce very slowly.

Example: if your credit card balance is €1,000 and you pay off €50 each month at an interest rate of 17%, our clearing your credit card calculator shows you that it will take two years to repay the balance, provided you stop using the card. If you increase your repayments to €100 per month, you could clear your balance in 11 months (13 months earlier). Our credit card calculator also works out how long it would take to clear your credit card debt if you switch to a credit card with a lower introductory or interest rate. That could mean clearing your debt even quicker and it could also cost you less in interest.

Tips on tackling your credit card debt

• Stop using your card. If you want to clear your debt, you need to stop adding to it. Resist temptation by leaving your card at home.

• Pay off as much as you can each month so that you reduce your debt as quickly as possible. If you are only making the minimum repayment each month, it will take you a long time to pay off your balance. Paying more than the minimum payment could help you reduce the time it takes to become debt free. Use our clearing your credit card calculator to see how increasing your monthly repayments will help you pay off your debt faster.

• Ask your credit card provider if they will consider reducing the interest rate on your card. This will reduce the amount of interest added to your credit card debt each month.

• Think about whether you could switch to a credit card that has a lower rate of interest, or 0% interest on balance transfers. Check out our credit card Money Toolto see what rates are currently on offer. If you are able to move your balance to a credit card with 0% interest for a period of time, then every cent you pay will reduce your debt. Use our clearing your credit card calculator to see if you can pay off your credit card debt faster by switching. Remember, this only works if you repay the balance during the interest free period and you don’t use the card! And if you do want to switch, your new card issuer will look at your credit history, employment status, income and the level of debt you have, including any credit card balances that you want to transfer.

• Consider reducing the credit limit to an amount you can comfortably afford to repay every month so you are not able to run up debt you cannot repay.

• Don’t miss payments or pay later than the due date or you will be charged late payment fees. You could set up a monthly standing order or direct debit for the minimum monthly repayment, or more if you can afford it, to avoid late payments. Late payment fees vary depending on your credit card provider. Late payments can also appear on your credit history.

• Choose a credit card that you can access online. This will help you keep track of your credit card balance and how much you are spending.
• Try not to use your card to withdraw cash, as interest is usually charged immediately, and can be higher than the interest rate for purchases. There is also a cash advance fee.

• Consider whether a debit card would be a better option for you in the longer term. Or, you could consider getting a prepaid card that can be used for purchases wherever a credit card is accepted.

If you are experiencing difficulty making your repayments and don’t know what to do, you can get help from the Money Advice and Budgeting Service (MABS). If you are considering using a debt management company, there are some things you should consider.