Managing Debt

Managing Debt

Prioritise Your Debts

Borrow as little as possible, for as short a time as possible.
Clear costly debts as soon as you can.
The possible exception is your student loan, which is relatively cheap borrowing;  so if you can afford to pay it off early, first consider the pros and cons.
The higher the interest rate, the faster a debt grows.
So reduce your highest-interest debts first e.g. bank loans or student credit cards.
Consider switching loans to a cheaper interest rate option.
But always check lock-in clauses to ensure you would not incur penalties by switching or paying off debts early.

Find out more:

 How To Prioritise Your Debts – Money Advice Service


Keep up with Repayments

Budget to set aside funds for monthly repayments.
Ensure repayments are automatically paid on time, by setting up a regular Standing Order (for a fixed amount) or Direct Debit (if the payments vary).

How to Set up Direct Debits & Standing Orders – Money Advice Service

Avoid late/missed repayments, which can cause a debt to escalate as it accumulates interest and hefty penalty charges. They can also have a negative impact on credit rating and future borrowing.

Don’t Pay Just the Minimum

For flexible borrowing like credit and store cards, the minimum payment indicates the lowest amount you must pay to avoid a charge.  You will pay interest on the balance.
But paying only the minimum takes longer to clear the debt, so you pay interest for longer and your total repayment will be higher.
Pay off as much as you can afford each month, and ideally, clear your monthly balance to avoid paying any interest at all.

Get Help with Financial Problems 

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If you are facing escalating debts even after making sensible cutbacks, or if you have already missed credit card or loan payments, or have fallen behind with rent or utilities bills, get help ASAP:

  • Talk to your bank straight away, then they are more likely to be helpful.
  • Check if you are entitled to claim benefits to ease the situation.
  • Don’t ignore debt problems – they will only get worse as interest and late payment charges build up; they will also harm your credit rating, making future borrowing more difficult.
  • Don’t borrow more to pay off existing debt, because that can lead to money problems spiralling out of control.


Free Help & Advice

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National Debtline
Call 0808 808 4000
Or use their online service: My Money Steps


StepChange Debt Charity
Call 0800 138 1111


Local Debt Advice Services – Money Advice Service
Search by town/post-code – speak to an adviser, book a face-to-face appointment, or contact them online


Debt Problems: What To Do & Where To Get Help – Money Saving Expert


Business Debtline
A National Debtline service for the self-employed
Call 0800 197 6026


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