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Ways to approach getting out of debt

There’s no quick fix to getting out of debt, but there are several approaches that can help you get on top of your repayments.

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Struggling with debt? ClearScore can help.

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Borrowing is normal for most people, but trying to manage too much debt can be both stressful and expensive. If you’re consistently paying more in interest and fees than you are towards paying back what you’ve borrowed, you may be stuck in persistent debt.

If your debt is feeling unmanageable, it’s important to take action as soon as possible. Getting in control of your repayments means that you can begin to reduce your overall debt. We’ve outlined the different approaches you could take to tackle paying off your debt.

Making a list of all the money you owe might feel daunting but having all your debts written down can help you to visualise your debt. Seeing it all in one place can help you to decide what approach you want to use to reduce it.

Write a list of all the companies you owe money to, how much you owe, the interest rate and the minimum payment. You can come back to this list to update it as you start paying down your debts. Next, go through your list and categorise your debts into ‘priority’ and ‘non-priority’ debts.

Your priority debts may include:

  • Your mortgage or rent
  • A loan secured against your home
  • Gas and electricity bills
  • Court fines
  • Child maintenance
  • Council tax
  • Hire purchase agreements
  • Income tax
  • TV licence

Not paying your priority debts can have serious consequences, such as your home being repossessed, receiving visits from bailiffs or getting a county court judgment.

If you’re struggling to make your minimum repayments for priority debts, you can contact a debt charity like StepChange or National Debtline for guidance. They can talk you through your options, such as putting arrangements in place for a debt management plan.

It’s important to speak to your lenders about your current circumstances if you’re struggling to keep up with your repayments. Most lenders can put you on a payment plan or put your interest on hold if you explain what’s going on.

Your non-priority debts may include:

  • Credit cards
  • Overdrafts
  • Payday loans
  • Bank or building society loans
  • Catalogue or store card debts
  • Water bill

You should always prioritise paying off your priority debts first. When it comes to deciding how to approach paying off your non-priority debts, such as credit cards, store cards or an overdraft, you could either use the snowball method or the avalanche method.

Using the avalanche method, you’d concentrate on paying off the debts that have the highest interest rates first, while paying the minimum payment on all the others. You could focus on paying off one at a time, so you don’t feel overwhelmed. It may seem like slow progress, but this might work for you if you’re a patient person, and you’ll ultimately save money.

If the interest rates on your debts are much the same as each other, you might find the snowball method is more suitable for you. For this method, you arrange your debts in order of their balances, from the smallest balance to the biggest balance. You then focus on paying off the smallest balance first, while paying the minimum payment on all the others. Once you’ve paid off the smallest balance, you work your way down the list, paying off the largest balance last of all.

If you have any savings, it’s worth considering whether you’d like to use them to pay off some debt. The interest charged on borrowing will probably outweigh the interest you earn on savings, so it might make sense to clear your debts. Just make sure you don’t face any penalties for paying things off early.

Debt consolidation is where you move the balances on your existing debts to one place. You’ll only need to keep track of one repayment rather than several per month, which you may find makes it easier to manage your repayments. Depending on your circumstances, you may want to consider using a balance transfer card or a debt consolidation loan. Used responsibly these could also improve your credit score in the long term.

Balance transfer cards

If you’re paying a high APR on your credit card debt, or you’re paying off several cards, you could cut down how much you are paying on interest by shifting your debt to a balance transfer card. Balance transfer cards typically offer an initial interest-free or low-interest period, which could allow you to pay off your credit card debt for next-to-no cost over several months. It’s important to make a note of the date when the initial interest-free or low-interest period comes to an end though, as the APR will then go up. Find out how much money you could save by swapping to a balance transfer card with our balance transfer calculator.

Debt consolidation loans

A debt consolidation loan allows you to move all your debt (such as personal loans, credit cards and store cards) into one place. This means you’ll have one big loan to cover the amount of your current debt, rather than several smaller ones. Our consolidation loan calculator can help you see how much you could save in interest by moving your debt.

You don't have to deal with money worries alone. It can feel daunting to face financial problems, but talking through your concerns could make things feel more manageable.

If you would like free guidance about how to manage your money or debt, you can contact Citizens Advice or the Money Advice Service. You could also speak to a debt advice charity, such as StepChange, National Debtline or the Debt Advice Foundation. You can either call their helplines, send an email or discuss your situation in a web chat.

If your debt is affecting your mental health, Mind and Samaritans have support helplines to provide a listening ear. They might offer you help in coping with the emotional and psychological impact of financial worries.


Sophie is our editorial expert who makes information about personal finance easier to understand.