How to pay off a credit card

Paying off credit card debt can feel overwhelming, but having a plan can help you take control. In this guide, we’ll dive into the details of credit card repayments and talk through a few different strategies you can use to pay down your balance and become debt free sooner.

In this guide

1. Understanding your credit card
2. Creating a budget
3. How to pay off credit card debt
4. Managing your debt repayments
5. Need extra support?

Understanding your credit card

Before you can start paying off your credit card, it's important to understand how credit works and how much you owe. Credit is money you borrow and agree to pay back over time. With a credit card, you'll usually need to make at least the minimum repayment fee each month, and interest may be charged on any balance you don't repay in full.

Your credit card statement is one of the most useful resources for understanding your account and planning your repayments.

Understanding your credit card statements

Your monthly credit card statements give you an overview of important information about your account, including:

• Your overall balance, so you know how much you owe.
• Your interest rate and how much interest you’re paying on your existing balance.
• Your minimum payment, the lowest amount you’ll need to pay to keep your account up to date.
• Your payment due date, which is the deadline for payments that month. 

Working out your total credit card balance

If you're paying off more than one credit card, start by reviewing each statement and adding together the balance on each card. This will show you how much you owe in total and give you a starting point for your repayment plan.

Although seeing the total may feel overwhelming, understanding what you owe can help you set realistic repayment goals and track your progress over time.

I have more than one credit card, which should I pay off first?

The right approach depends on what works best for you. For example:

• If your goal is to reduce the amount of interest you pay, you could focus on paying off the card with the highest interest rate first while continuing to make at least the minimum payment on your other cards.
• If you'd rather build momentum, you could focus on paying off the card with the smallest balance first. Seeing a balance cleared may help you stay motivated.

How long do you have to pay off a credit card?

There's no fixed time limit for paying off your full credit card balance. As long as you make the minimum payment each month, your account will stay up to date.

However, only paying the minimum amount usually means it'll take longer to clear your balance and you'll pay more interest overall. If you can afford to, paying more than the minimum can help you manage your credit card balance more effectively.

Once you know what you can realistically afford to repay each month, the next step is creating a budget that supports your repayment plan.

Creating a budget

It’s important to have a clear understanding of income, outgoings, and overall spending habits. Creating a budget that covers all of this will help you manage your finances so you can dedicate funds towards paying off your credit card debt.

How to create a budget

A simple budget should track your incoming money and outgoing spending:

1. Start by listing your monthly sources of income, such as salary or wage payments, benefits, and any other regular money you receive each month.
2. Next, make a list of your regular outgoings, such as your rent or mortgage, bill payments, insurance, and any other monthly expenses.
3. Review your spending on groceries, entertainment, and other lifestyle costs over the last 3-4 months and determine an average for each of these categories.

This should give you a fair picture of your current financial situation. From here, you may be able to identify areas where you can cut down on costs (such as spending less on entertainment or cancelling a service that you don’t use).

You will then be able to work out how much you can afford to dedicate to paying off your credit card each month.

Looking for more budgeting support? Read our guides on how to manage your money day to day and how to budget on a low income for practical tips on staying on top of your finances.

How to pay off credit card debt

There's no one-size-fits-all approach to paying off credit card debt. The right strategy depends on your individual financial situation, but there are several common repayment methods that could help: 

The Snowball Method

The Snowball Method focuses on paying off your smallest balance first while continuing to make the minimum payment on your other credit cards. Clearing smaller balances first can help you build momentum and stay motivated.

Here’s how it works:

1. Identify which of your cards has the smallest balance.
2. Create a budget that allows you to pay off that balance first, while making minimum payments on your other cards.
3. Once you have cleared off the smallest balance, move onto the next smallest and repeat the process.

The Avalanche Method

The Avalanche Method involves paying off the credit card with the highest interest rate first while continuing to make the minimum payment on your other cards. This approach could help you reduce the amount of interest you pay over time. 

Here’s how it works:

1. Identify which of your credit cards has the highest interest rate.
2. Create a budget that allows you to pay off that balance first, while making the minimum payment on the other cards.
3. Once you’ve paid off the card with the highest interest, move onto the card with the next high interest and repeat the process.

If you'd like to compare these methods in more detail, see our guide to understanding debt repayment methods. 

Balance transfer credit card

A balance transfer credit card allows you to carry over your existing credit card balance to a new card with a low or 0% promotional interest rate.

Transferring your debt to a balance transfer credit card means you can stop paying high interest on your credit card balance for a set period of time, which can make it easier to pay it off at a faster rate.

Before you apply, make sure you understand any balance transfer fees that may apply and how long the promotional interest period lasts before the standard interest rate (APR) applies to any remaining balance. Our Platinum Balance Transfer Card has a representative APR of 24.9% (variable).*

If you're thinking about this option, read our Balance Transfer Guide to learn how balance transfers work, what fees may apply and whether they're right for you. 

Debt consolidation loan

If you have multiple credit cards and you want to simplify your debt, you could consider applying for a debt consolidation loan. This allows you to combine multiple sources of debt into a single loan with a potentially lower interest rate.

Debt consolidation isn't right for everyone, however. Before choosing this option, make sure to research the terms of the loan and check that you can afford to take on the interest rate, repayment period, and any fees that might apply.

For TSB personal loans, the representative APR is 6.1% for loans from £7,500 to £25,000 over 1–5 years.** 

Managing your debt repayments

Whichever repayment strategy you choose, making regular repayments and building healthy financial habits can help you reduce your balance over time. Small changes can make a big difference, especially if you review your progress regularly and adjust your plan when needed. Here are some tips for staying on track: 

1. Make more than the minimum payment

If you can afford to, try to pay more than the minimum payment each month. This will help to reduce your overall balance faster so you’re paying less interest over time.

2. Set up direct debit repayments

Make your repayments automatic by setting up a direct debit. This will help you to avoid late or missed payment fees and protect your credit score. 

3. Pay more frequently

If it’s within your budget, making extra payments throughout the month can help reduce your balance sooner. For example, you could keep your regular monthly direct debit and make additional payments whenever you have spare money available, such as after overtime or a bonus.

4. Avoid new debt

While you're paying down your balance, try to avoid adding new debt where possible. Sticking to your budget can help you stay on track and make steady progress towards clearing your balance.

5. Monitor your progress

Keep checking in with your balance and your budget regularly to make sure your repayment plan is still working for you.

Need extra support?

If you're finding it difficult to manage your credit card repayments, you're not alone. Getting help early could make it easier to find a solution that works for you.

We have a range of resources available if you're concerned about your finances:

• Money worries hub
• Debt management support
• Guide: How to get help with money and debt

Alternatively, if you'd like to speak to us directly, get in touch and we'll take the time to understand your circumstances and discuss the options available to you.