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Last updated: 23/07/2020 | Estimated Reading Time: 4 minutes

Overcoming credit card debt

Being swamped by credit card debt is never a good feeling and it can often seem like the light at the end of the tunnel is getting further and further away as more interest piles on top of what you already owe.

But don’t panic!

There are options available. By using either a 0% balance transfer card or a low interest personal loan, you could offset the debt and give yourself a bit more breathing space as you work to come up with the necessary cash.

We’ll go through the pros and cons of each option so that you can work out which would be best for you.

In This Guide:

The options

Beyond simply cutting back on spending and putting money aside to save up, there are two basic options available to help you escape credit card debt.

The benefit of these two options over and above simply saving up is that they allow you to cut down, or completely eradicate for a time, the interest that is causing your debt to grow at the rate it does.

Firstly, you could transfer your existing debt to a 0% balance transfer card and put off paying interest for a time while you make up the cash necessary to pay it off.

And secondly, you could take out a further loan with a lower interest rate than that attached to your existing card and offset the debt this way.

0% balance transfer cards

Balance transfer cards work by allowing you to transfer the debt from an existing card on to them for a small fee, typically around 2-3%.

Once the debt is transferred to this new card, you can enjoy a period during which no interest is charged. This gives you time to come up with the money without your debt growing wildly as you do so.

It is worth noting that once this 0% interest period is over, you will be charged much higher interest rates than you would on your existing card, so timing is important. So if your balance transfer card offers your 24 months at 0% interest, then you want to make sure that you have paid as much as possible, if not all, of your debt before it finishes and the high interest kicks in.

It is also important that you don’t actually spend money using your 0% balance transfer card – it should be treated solely as a depository for debt, not as just another credit card.

One of the key benefits you get from using a balance transfer card instead of a loan to deal with existing credit card debt is the flexibility you get when it comes to repayments.

There will be a minimum monthly repayment amount required from your balance transfer card and failing to meet it can mean that you sacrifice your 0% interest benefits but beyond this what you pay is basically up to you. You should be aiming to pay off as much as you can afford to each month anyway though, so that you can try and clear the balance before the 0% interest period is over.

With a loan, you have simply a certain fixed amount you need to pay off each month to avoid being severely penalised.


A personal loan is another option you have when it comes to dealing with credit card debt.

The main advantage of using a loan instead of a credit card is that the basic interest rates will be much lower.

You won’t get a 0% period like you would with a balance transfer card, but depending on the size of the debt and the length of time it takes you to pay it back, you could actually end up better off by paying the low interest rates from a good loan than you would by paying 0% for two years and then significantly more for a year after that.

Cost comparison

A loan charging around 5% interest is not out of the ordinary, and this would mean that a debt worth £4,000 paid off over the course of three years would cost you around £315.

If you transfer the same amount of debt to a balance transfer card, you’ll likely be charged a small fee of around 3% for the transfer itself, so in this case £120.

If your interest free period is 24 months long, and then at the end you have £1500 left to clear, you’ll be paying something like 20% interest on that remaining balance. If you then clear it within a year you’ll be paying around £167. Combined with the £120 fee to begin with this makes the balance transfer card option cost around £287 altogether.

In this case, the card is cheaper than the loan. If you can afford to pay much more than the minimum amount each month once the interest does kick in, it will be cheaper still. And if you manage to pay off the whole balance before the interest free period is over, it will be significantly cheaper. On the other hand, if you take longer than this to pay it all off, the loan would likely end up cheaper.