If you’ve got a lot of debt sitting on your credit card following Christmas, and it’s racking up a lot of interest, the first step you should take is to transfer that debt onto a 0% balance transfer credit card.

The top card to use at the moment is the Virgin Credit Card, which offers an interest free period on all balance transfers for 16 months. So this means you’ve got 16 months to start making progress tackling your debt without worrying about paying interest.

It’s a good idea to set up a monthly standing order for your minimum monthly repayment to make sure you don’t forget to make a payment each month. If you do, you could be charged a fee, lose your 0% deal, and possible get a black mark on your credit record.
Get budgeting

If you’re struggling to pay off your debt, the most obvious way to tackle it is to throw as much money towards it as possible.

But if you’re feeling a little strapped for cash, this might seem slightly daunting. So a good idea is to sit down and draw up a budget. To do this, work out exactly what your monthly outgoings and earnings are by using a statement of affairs calculator.

If you can’t manage to get all of your credit card debts onto interest-free deals, you need to adopt the method of ‘snowballing’.

To do this, simply work out which of your credit card debts is charging the most interest – this is the debt that will grow at the fastest rate, so it’s the one you need to concentrate on.

Keep paying the minimum monthly payments on all of your borrowings, but put any spare cash towards your most expensive debt. Once you’ve paid off this debt, put the extra money towards the next most expensive debt, and so on. Leave your interest-free debt until last.

As I mentioned earlier, it’s important to remember to pay the minimum monthly repayment (MMR) on your credit card each month. However, minimum monthly repayments are usually set at a ridiculously low level – often as low as 2% of your total card debt.

This means it will take you a long time to pay off your balance – typically more than 15 years on £1,000 of debt. This also means your debt becomes much more expensive, as you’ll be paying a lot of interest over that period.

So it’s a good idea to set up a direct debit and pay a fixed amount on top of the minimum monthly repayment each month. That way you will pay off the debt far quicker and you won’t have to pay as much in interest. You can find more about minimum monthly repayments in The dangers of minimum payments.