Find the best cure for your debt hangover

How to cut the credit-card bill

It's that time of year again - the celebrations are over and now we have to pay for them. Most of us have overspent, even those who started out with the best of intentions. So what is the best way to pay off the debts?

It's that time of year again - the celebrations are over and now we have to pay for them. Most of us have overspent, even those who started out with the best of intentions. So what is the best way to pay off the debts?

First, don't ignore bills in the hope that they will go away. If you can't meet the repayments, tell your creditor. There are a number of independent helplines such as the National Debtline and Consumer Credit Counselling Service (see below) which can help.

It also pays to look at debt as part of your overall financial situation. Work out how much you can afford to pay back now. If you have spare cash sitting in a bank account earning a paltry rate of interest, for example, use it to pay off some credit card debt. That £100 in a current account might earn a couple of pounds interest over the year. But pay off £100 on your Barclaycard bill instead - 19.9 per cent APR (annual percentage rate) - and you could reduce the annual interest payments from £199 to £179.10.

Remarkably, a large number of people stay loyal to a credit card provider even though competitors offer cheaper rates. It is amazing that hundreds of users still pay an annual charge of £10 or more when new kids on the block such as Morgan Stanley Dean Witter not only do not charge but actually pay the customer to spend, giving 1 per cent cash back on all purchases.

It might be too late to undo the spending, but minimise the damage by checking out how much interest you are paying on your card. If the APR is more than 10 per cent, you should switch to another provider.

Not only are there loads of good deals, it is quicker and easier than you think. Tesco is charging an introductory rate of 4.9 per cent on debts transferred from another credit card as well as on any new purchases made. The rate is guaranteed until January 2001; then it reverts to the standard 14.9 per cent. If you have not cleared the debt by then, there is nothing to stop you switching again to a lower rate elsewhere.

Not all cards offer such a good deal. Some give cheap transfers but charge more for those who continue borrowing. The Newcastle Building Society Platinum Plus card, for example, has a 4.9 per cent APR on transferred balances for the first six months. This then goes up to 15.9 per cent, which is also the rate charged on new purchases.

To get round this you could pay off your old debt on this card, while using another card with a lower rate - say Egg's 9.9 per cent standard rate - for any new purchases you make.

While there are plenty of good deals on credit cards, store cards are not so attractive. Many offer incentives but the majority charge staggering amounts of interest. Marks & Spencer, for example, charges 25.7 per cent. So unless you can pay off the balance every month, cut up the store card and pay off what you owe. You might consider a personal loan to enable you to do this, and this goes for credit card debts too.

The advantage of personal loans is that they are less flexible than credit or store cards so are great for making debt repayments more manageable.

The market is rife with lenders offering low rates. "With a personal loan you can budget repayments into your lifestyle and, as the debt reduces, actually see that there is light at the end of the tunnel," says Alison Arnot of Direct Line.

An increasing number of lenders are abolishing redemption penalties for people who repay their loans early. This creates greater flexibility should your financial situation improve over the term of the loan.

If you do decide to opt for a loan don't just focus on the APR, which can be misleading as not all rates are calculated using identical indices. A better comparison would be the monthly repayments and the total you would end up paying back.

Check out for some of the best rates. At the moment, on a £1,000 loan over one year, the best lenders are Fleming Premier, Northern Rock and National Counties Building Society. Of the banks, Abbey National and the Co-operative are the most competitive.

Other considerations to take into account include whether or not you want a secured or unsecured loan. "Secured loans are often cheaper than unsecured, but it means your home is at risk if you do not keep up your payments," warns Nicolette Dawson, a spokeswoman for HSBC. Lower rates can also be available to graduates or new current account customers, so it is worth checking if you are eligible for any special terms.

Contacts: Consumer Credit Counselling Service, 0800-138 1111; National Association of Citizens Advice Bureaux, 0171- 833 2181 or; National Debtline, 0808-808 4000; Tesco, 0800 406050 or; Egg,;

Alexis Sanchez has completed a £35m move to Arsenal, the club have confirmed
sportGunners complete £35m signing of Barcelona forward
Poor teachers should be fearful of not getting pay rises or losing their job if they fail to perform, Steve Fairclough, headteacher of Abbotsholme School, suggested
voicesChris Sloggett explains why it has become an impossible career path
world cup 2014
Ray Whelan was arrested earlier this week
Arts and Entertainment
In a minor key: Keira Knightley in the lightweight 'Begin Again'
Arts and Entertainment
Celebrated children’s author Allan Ahlberg, best known for Each Peach Pear Plum
peopleIndian actress known as the 'Grand Old Lady of Bollywood' was 102
Wayne’s estate faces a claim for alleged copyright breaches
newsJohn Wayne's heirs duke it out with university over use of the late film star's nickname
Life and Style
It beggars belief: the homeless and hungry are weary, tortured, ghosts of people – with bodies contorted by imperceptible pain
lifeRough sleepers exist in every city. Hear the stories of those whose luck has run out
Mick Jagger performing at Glastonbury
Life and Style
fashionJ Crew introduces triple zero size to meet the Asia market demand
Santi Cazorla, Mikel Arteta and Mathieu Flamini of Arsenal launch the new Puma Arsenal kits at the Puma Store on Carnaby Street
sportMassive deal worth £150m over the next five years
Arts and Entertainment
Welsh opera singer Katherine Jenkins
musicHolyrood MPs 'staggered' at lack of Scottish artists performing
Life and Style
beautyBelgian fan lands L'Oreal campaign after being spotted at World Cup
Arts and Entertainment
Currently there is nothing to prevent all-male or all-female couples from competing against mixed sex partners at any of the country’s ballroom dancing events
Potential ban on same-sex partners in ballroom dancing competitions amounts to 'illegal discrimination'
Finacial products from our partners
Property search
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Business Analyst Consultant (Financial Services)

    £60000 - £75000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

    Systems Administrator - Linux / Unix / Windows / TCP/IP / SAN

    £60000 per annum: Harrington Starr: A leading provider in investment managemen...

    AVS, JVS Openlink Endur Developer

    £600 - £700 per day: Harrington Starr: AVS, JVS Openlink Endur Developer JVS, ...

    Technical Support Analyst (C++, Windows, Linux, Perl, Graduate)

    £30000 per annum: Harrington Starr: A global leader in trading platforms and e...

    Day In a Page

    A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

    A History of the First World War in 100 Moments

    Peace without magnanimity - the summit in a railway siding that ended the fighting
    Scottish independence: How the Commonwealth Games could swing the vote

    Scottish independence: How the Commonwealth Games could swing the vote

    In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
    Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

    A writer spends a night on the streets

    Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
    Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

    UK's railways are entering a new golden age

    New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
    Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

    Conchita becomes a 'bride' on Paris catwalk

    Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
    Pétanque World Championship in Marseilles hit by

    Pétanque 'world cup' hit by death threats

    This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
    Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

    Why did we stop eating whelks?

    Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
    10 best women's sunglasses

    In the shade: 10 best women's sunglasses

    From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
    Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

    World Cup final: Messi? Mascherano is key for Argentina...

    No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
    Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

    Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

    18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
    The true Gaza back-story that the Israelis aren’t telling this week

    The true Gaza back-story that the Israelis aren’t telling this week

    A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
    A History of the First World War in 100 Moments: The German people demand an end to the fighting

    A History of the First World War in 100 Moments

    The German people demand an end to the fighting
    New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

    New play reveals what Oscar Wilde said at trials

    For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
    Can scientists save the world's sea life from

    Can scientists save our sea life?

    By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
    Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

    Richard III review

    Martin Freeman’s psychotic monarch is big on mockery but wanting in malice