Christmas debt hangover? How to pay it off for less
If the thought of how much you've spent over the festive period is now starting to give you a headache, take a look at how a 0% credit card could help.
If you have credit card debts
If your spending is on a credit card and you're going to be hit by interest charges, see if you can shift it to a 0% balance transfer credit card.
With introductory interest-free periods of up to 43 months on offer, this could give you some vital breathing space to pay off your debt.
These cards aren't completely free though. You'll be charged a balance transfer fee for moving your debt over on most cards.
This is a percentage of the debt you're transferring. So, for example, if you're transferring £2,000 to the Halifax 43-Month Credit Card, which has a balance transfer fee of 3.29%, it will cost you £65.80.
Here are the 0% cards with the longest interest-free periods.
Credit card | 0% period on balance transfers | Balance transfer fee | Cost of transferring £2,000 balance | Representative APR after 0% period ends |
43 months | 3.28% | £65.60 | 18.9% | |
MBNA Platinum Credit Card | 43 months | 3.29% | £65.80 | 18.9% |
42 months | 2.99% | £59.80 | 18.9% | |
42 months | 3.5% | £70 | 18.9% | |
41 months | 0% | £0 (but £36 annual fee) | 21.7% | |
41 months | 3.09% | £61.80 | 20.9% |
As you can see the longest lasting deal offers to freeze the size of your debt for 43 months. However, by going for the next longest deal from Barclaycard which is only a month shorter you will save nearly £6.
If you think you can pay off your debt over a shorter period of time, you could get a card that doesn't charge you a fee or comes with a much smaller one.
Here are the 0% cards with the cheapest balance transfer fees right now.
Credit card | 0% period on balance transfers | Balance transfer fee | Cost of transferring £2,000 balance | Representative APR after 0% period ends |
26 months | 0% | £0 | 18.9% | |
28 months | 0.5% | £10 | 18.9% | |
30 months | 0.59% | £11.80 | 19.9% | |
Sainsbury's Bank Nectar 33-Month Balance Transfer Credit Card | 33 months | 0.62% | £12.40 | 18.9% |
38 months | 1.45% | £29 | 18.9% |
* £3 monthly fee applies
If you have an overdraft
If you've gone into the red on your current account, then there are some credit cards that can help. They are 0% balance transfer credit cards that also offer what's known as a money transfer.
A money transfer allows you to borrow money to put into your bank account for an introductory interest-free period. As with a 0% balance transfer, you'll be charged a percentage of your debt for the privilege.
Here are the longest lasting deals.
Credit card | 0% period on money transfers | Money transfer fee | Cost of transferring £2,000 balance | Representative APR after 0% period ends |
41 months | 3.79% | £75.80 | 20.9% | |
40 months | 3.89% | £77.80 | 18.9% | |
36 months | 2.69% | £53.80 | 19.9% | |
32 months | 1.69% | £33.80 | 19.9% | |
30 months | 4% | £80 | 19.9% | |
25 months | 2% | £40 | 18.9% |
Alternatively you could try switching to another current account. The Nationwide FlexDirect account offers a 12-month fee-free overdraft, although the size of your overdraft will depend on your credit rating.
If you can't get a top 0% card
If your credit rating isn't great and you can't get one of the top 0% cards, you could see if you can switch to a credit card with a lower interest rate. If that isn't possible, then you might be able to pay off your card debts with a personal loan at a lower interest rate than you're paying on the cards.
If you do take out a loan, it's important to rein in your spending until you pay it off. And budget for next Christmas now.
If you're in serious debt
If your bills are mounting up and you feel like you can no longer cope, don't panic. Free, confidential help is available from a range of sources, including Step Change, National Debtline and Citizens Advice.
