When the monthly credit card statement flops through the letterbox, the temptation for many is simply to make the minimum repayment and file the piece of paper away.
But add just an extra £1 a week to this sum, the smallest required by your lender, and you could slash more than £1,200 from your overall repayments and cut the time taken to repay the debt by 13 years.
That's according to new research from the price- comparison website Uswitch.com. Its figures suggest that the 3.4 million cardholders in the UK who make only the minimum repayments on their accounts could save a total of £4.2bn by paying the extra £4 a month.
The above savings are based on making minimum monthly repayments of 2 per cent of the average credit card balance - £3,138 - at the average annual percentage rate (APR) of 15.1.
While most lenders require this minimum 2 per cent (or £5) of the outstanding balance, a minority, including Nationwide and HSBC, demand 3 per cent. And credit card borrowers repaying £5,000 at 2 per cent, Uswitch's research shows, end up handing over £537 more than a person borrowing £10,000 on a card with a minimum of 3 per cent.
Separate studies reveal that a £2,000 credit card debt at an APR of 15.9, repaid at only the minimum 2 per cent, would take more than 28 years to clear.
"Today, there's the possibility that some people could finish off paying their mortgage before their credit cards," says Uswitch spokesman Nick White.
"While low, affordable minimum monthly repayments are marketed as being a benefit to cardholders, this benefit is a big moneyspinner for the banks."
Card providers have introduced "health warnings" on credit card statements telling people that minimum repayments mean it will take longer to clear the debt and cost consumers more.
However, these warnings don't go far enough, Mr White says.
"We believe it is time the industry agreed a standard minimum repayment amount of at least 3 per cent for all credit cards."
Frances Walker from the Consumer Credit Counselling Service says that making minimum repayments is a "mug's game" - and advises borrowers to try to clear their balances each month.
She also recommends that they make the most of cards offering 0 per cent deals - but also urges them to use the interest-free period as an opportunity to clear their balance before high APRs kick in.Reuse content