Clear Credit Card Debt: A Plan That Beats Minimums
By The Bureau of Wealth Team 1199 words
This article is general information, not financial advice. Consider your own circumstances or speak to a qualified adviser before acting on it.
Minimum payments can take decades and trigger the FCA's persistent debt rules. Here's a fixed-payment plan, worked examples and when to get free help.
To clear credit card debt, set one fixed monthly payment that is well above your minimum, keep paying it as the balance falls, and stop using the cards you are clearing. If you pay only the minimum, you can end up in what the Financial Conduct Authority calls persistent debt, where your provider must step in. A 0% balance transfer helps only when you can clear the balance before the offer ends.
This guide is for anyone rolling a balance over on one or more credit cards. If you are already missing payments or juggling priority bills such as rent or council tax, read the section on when this plan is the wrong one first.
The minimum payment is built to last decades
Card interest in the UK is expensive. The Bank of England's Money and Credit release puts the effective rate on interest-charging credit cards at 21.45% in July 2026. At that level, a minimum payment barely touches what you borrowed.
Take a £4,000 balance at 21.5% APR, with a minimum made up of the month's interest plus 1% of the balance and never less than £5. Providers set their own formulas, so treat this as an example and check your statement. In our credit card payoff calculator, the first minimum is £111.67. Keep paying only the minimum and it takes 367 months, more than 30 years, and costs £6,956 in interest. Fix the payment at £150 instead and you finish in 37 months, paying £1,488 in interest.
That's £38 a month more than the first minimum, kept steady, saving about £5,470. The minimum falls every month; your payment shouldn't.
What the persistent debt rules mean for you
Look at that example again. At 21.5%, a month's interest is roughly 1.8% of the balance, while the minimum repays only 1% of it. So you pay more in interest than you repay of the debt, month after month. That is exactly the pattern the FCA's persistent debt rules target, and it is the part most payoff guides miss: a "sensible" minimum-payment habit can put you inside a regulatory definition.
Under rules that came into force in March 2018, the FCA defines persistent debt as paying more in interest, fees and charges than you have repaid of the balance over 18 months. The steps, set out in the FCA's consumer guide, are:
- 18 months: your provider must contact you, prompt you to pay more, offer help and warn that your card may eventually be suspended.
- 27 months: it must send a reminder if it thinks you are still likely to be in persistent debt at 36 months.
- 36 months: it must offer you ways to repay the balance more quickly. If you can't afford to, it must show forbearance, which can include reducing, waiving or cancelling interest, fees or charges.
Don't ignore these letters. Reply by the deadline, and if you can afford one of the repayment options, take it. If you can't, say so; that is what the forbearance rules are for.
Fix the payment, then choose avalanche or snowball
List every card with its balance, APR and minimum, and add up the minimums. Decide the total you will pay each month across all of them. That number, far more than anything else, decides when you are debt-free.
Next, choose where the extra goes. The avalanche puts everything above the minimums on the highest-rate card. The snowball targets the smallest balance first so accounts close sooner. Either way, when one card is cleared, its payment moves to the next.
We ran three cards through the debt payoff calculator: a £600 store card at 29.9%, £3,200 at 18.9% and £5,000 at 24.9%, with minimums of £235 in total.
| Monthly total and order | Months to clear | Total interest |
|---|---|---|
| £235, snowball | 68 | £6,947 |
| £235, avalanche | 67 | £6,900 |
| £450, snowball | 25 | £2,408 |
| £450, avalanche | 25 | £2,188 |
At £450, the avalanche beat the snowball by £219. Moving from £235 to £450 a month saved about £4,700. Use the avalanche unless a small balance can go within a few months and that early win is what will keep you on track.
Using a 0% balance transfer properly
A balance transfer card can stop interest while you repay, but MoneyHelper points out that providers usually charge a fee for each transfer, and anything left when the 0% period ends is charged at the card's standard rate. Missing a minimum payment can also end the deal early.
Work out the monthly payment the offer demands. Say the £4,000 moves with a 3% fee, making £4,120, on a 20-month 0% deal. You need £206 a month to clear it in time. If you can only manage £150, you will still owe money when the rate jumps, although you will owe much less than if you'd stayed put. Put the transferred card away: new spending on it muddies the plan. Fees and offer lengths vary between providers, so check the terms and run your own figures with the rate set to 0%.
You also have to be accepted for the new card. If you are close to applying for a mortgage, check how much of your income already goes on debt repayments with the debt-to-income ratio calculator before taking on a new card.
When this plan is the wrong one
The honest limit of any payoff plan is that the extra £40 or £200 a month has to come from your budget, often for two or three years, and it collapses if the cards keep being used. A small cash buffer helps stop the next boiler repair landing back on a card; a common guideline is a few hundred pounds while you repay, built up later with the emergency fund calculator. We'd also keep paying into a workplace pension if your employer contributes, rather than giving up that money to repay cards faster.
Change course if any of these apply:
- You can't pay the minimums, or you're behind on rent, mortgage, council tax or energy. Those bills come first. Get free, confidential debt advice through MoneyHelper before paying extra on cards.
- Even your best budget leaves you in debt for many years. A free debt adviser can talk through options such as a debt management plan. Free advice exists, so you don't need to pay a firm for it.
- You've had a persistent debt letter. Respond to it. The provider's repayment options may cost less than a new balance transfer.
Your next steps
- Next 10 minutes: find your latest statement for each card and note the balance, APR and minimum payment.
- Today: enter those figures, then try two or three monthly totals in the debt payoff calculator to see what each extra £25 saves.
- This week: set a Direct Debit for a fixed amount rather than the minimum, aim the extra at the highest-rate card and remove saved card details from shopping sites.
Sources
- Financial Conduct Authority: New credit card rules introduced by the FCA
- Financial Conduct Authority: Help for consumers who are in persistent credit card debt
- Bank of England: Money and Credit - July 2026
- MoneyHelper: Transferring your credit card balance
