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Top tricks to help you pay off debt in 2016

Spending over Christmas has left many of us the laborious task of paying back those bills in the New Year, but a few simple tricks can help get you out of the red faster.
It’s estimated that up to nine out of ten people will start the year with credit card debts that average £2,400; And two-thirds of Britons are concerned about their level of debts.

Now, the good news for borrowers is interest rates are likely to stay low well into 2016 – so now’s the time to prioritise paying off your borrowing before it could get more expensive.

So what can you do?

First, work out the amount you owe and put together a realistic budget of how much you can spare each month to pay off debts until they are cleared.
The Citizens Advice has a useful budget tool and more information on how to prioritise debts.
If you’re feeling overwhelmed by your debts you can also speak to someone for free from Citizens Advice or the National Debtline.

Unless you are in arrears or behind on your repayments, look to pay off your most costly debts first (the one with the highest interest rate).
If you can bring down the cost of your debt, it means that you can pay it off even quicker, here’s how.

0% balance transfer credit cards

Balance transfer credit cards allow you to move the debt and not pay any interest for a set period of time, this will allow you to save money and clear the debt faster.
As long as you keep up the minimum repayments. You can also pay off more money one month than another depending on your commitments.
Right now, Virgin and Barclaycard are offering balance transfers cards that charge no interest for 32 months. However, these cards typically come with transfer fees that are charged as a percentage of the debt transfered and added to the debt – on the 32 month cards Barclaycard charges 1.15% and 1.19%.
It’s also possible toget lower fees in exchange for shorter interest free periods though. For example, the Post Office balance transfer card has a fee of 0.33% and charges no interest for 26 months.

The best deal depends on how long you will need to pay off debts.
Just remember to keep to a strict schedule with your repayments. Typically, the card provider will prefer that you will still have debts remaining when the interest-free period ends, which means you either have to pay to move debt again (and incur another fee), or your balance is subjected to the card’s standard charges.
The better your credit rating then the better the offers that are available and you can check your credit rating for free here to give you a good idea of your chance of approval without damaging your score.

Happy New Year

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