Beginnner's guide to... Clearing Christmas debts

Prioritise



If you owe money on a number of credit or store cards and can't afford to pay them all off in one go, focus on clearing the most expensive one first. If you are unsure what rates of interest you are being charged, check on your statements. You must pay at least the minimum every month off each card, but once you've done that aim to pay more off the most expensive balances.



Pay more than the minimum



If possible, pay more than the minimum repayment required by your card provider. You'll save a significant amount in interest and will be debt-free sooner.



Do you qualify for a balance-transfer card?



It may be possible to reduce the cost of your debts by consolidating your outstanding credit or store card balances on to one card. A number of credit card providers offer interest-free periods on balance transfers (although you will be charged a transfer fee of between 2.5 per cent and 3 per cent). These deals are only available to those with excellent credit scores. If you have an unblemished credit history it is well worth applying for one of these cards.



Speak to your existing card provider



If you don't think you'll qualify for one of the leading balance-transfer cards, speak to your existing card providers to see if they'll offer you a preferential rate if you make a balance transfer. You're unlikely to get 0 per cent, but you may be offered a lower rate than that which you're currently being charged.



Always pay something



Missed payments have a negative impact on your credit score so it's really important not to fall behind on your credit card payments. If you are worried that you won't even be able to afford the minimum, contact your card provider as soon as possible and explain your situation. It is much more likely to be sympathetic if you get in touch before you miss a payment.

Clare Francis is editor of moneysupermarket.com

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