I’ve looked before at what order you should pay off your debts – for many of us that will mean clearing that credit card balance! It’s so convenient to let it build up and up as the monthly minimums start off being low. But if you, like me, have looked in horror at the total, you know it has to go.
Here are three ideas that could really speed this up for you.
Get those regular bills down
You know how keen I am on saving money everywhere. It’s a great feeling when you find a free offer… but somehow saving money on your bills often gets put off to another day.
I know it’s tough to find the time and energy to do this. With my three children in the house there is always something else more interesting or urgent to do apart from look for cheaper insurance or electricity or broadband. But it may only take you half an hour to save on an insurance or switch energy supplier – and that may be the best paid half an hour you do all year!
Read this post about how to have a money detox for more tips to clean out regular payments that are costing you too much.
Use a windfall
You may be thinking “I am too sensible to play the lottery, so I am not going to get a windfall”. But here are some that may work for you:
- Council tax. Most people pay it in 10 monthly instalments, so they don’t pay anything in February and March. So, if you are used to budgeting for that amount every month, in those two months you could pay off more on your credit card. This could be very good timing if you used the card for Christmas presents!
- Get a PPI refund. If you have had one rejected, you may now be able to reclaim again and win as the rules have changed.
- Be sent a ROP refund. A million people are going to get a nice surprise this year when Vanquis sends them a refund for their ROP. ROP is a bit like PPI, an extra insurance added on that a lot of people have had. If you have a Vanquis card, look at your statement to see whether you are paying this. If you are, then you will be sent a refund automatically, even if your card is closed. But also think about cancelling the ROP as it’s very expensive. Ditching it will help you get the balance down much faster.
You can also invent your own windfalls! If you really wanted that handbag and the money is in your account but you were so good and decided not to get it, you could pay the money straight off your credit card.
This even works with everyday small purchases. Say “No” to a cake with your coffee, pay £2.50 off your credit card. Get pizzas from the supermarket instead of a takeaway and pay £7 off the credit card. These amounts may seem tiny compared to your balance, but doing this a few times a month will add up.
Why pay it off the balance immediately, not wait until the end of the month? If you wait, the money may just get frittered away. Also, it turns it into a reward for taking a good decision – and that feels good!
Get a 0% deal
If you can transfer your credit card balance to a new card at 0% interest, all your money is paying it off every month and it will really start to drop.
But don’t just apply for one, you want to check first that you are likely to be accepted. Martin Lewis’s Money Saving Expert has a page which is kept updated with the best deals and how to check which you are likely to get.
This could make a dramatic difference to how fast you can clear your credit card debt. The only reason I didn’t put it first is because if you have a lot of credit card debt or your credit rating isn’t good, you may find that you can’t get a 0% offer. But in this case, wait six months or a year and look again. As you chip away at the credit card debt each month, your credit rating will be improving and you will be more likely to get one of these deals.