Beat your debt into submission

It's a bumper time for borrowing. Credit card companies are battling for customers with longer and longer 0% deals and personal loan rates are at record lows. But the downside of all this is the increasing number of people getting themselves into a debt black hole.

The Citizen's Advice Bureau has reported it is dealing with 7,824 new debt problems every day, and 52% of the population is struggling to keep up with debt, according to the Money Advice Service.

So, how can you turn this bumper time for borrowing to your advantage? It's quite simple really, says Jane Symonds, spokeswoman for the Money Advice Service. "If you need to borrow money, identify the cheapest possible way and repay it as quickly as you can."

With the right products, you can shave years off the time it takes to repay your debts and pay thousands of pounds less in interest. "It's vital that you research carefully before signing up to any new loan or credit card," says Michael Ossei, personal finance expert at

See top credit cards available to you today

"Have a look at the current deals on the market and try to strike a balance between the rate of interest, any fees involved, and the length of time you need to pay back the debt."

Sound complicated? It needn't be, read on to find out how to find the perfect borrowing solution for your debt situation.

I owe less than £5,000 on credit cards

If you have debts of less than £5,000, the cheapest, quickest way to pay them off is with a 0% balance transfer credit card. At the moment, it's all out war in the credit card world with several providers battling to offer the longest interest-free period.

"For anyone looking to consolidate existing debts on to a credit card, now is the perfect time to do so with record deals on offer," says Kevin Mountford, head of banking at

It's now possible to move your debts on to a credit card and not pay any interest for well over two years - 28 months to be exact. This incredibly long interest-free period is offered on Barclaycard's Platinum Credit Card with Extended Balance Transfer. But the card comes with a hefty 3.5% balance transfer fee, so it may not be the cheapest option.

If you can pay your debts off quicker, there are cards with shorter 0% periods but lower transfer fees. For example, if you owe £4,900 you'd save the most money by moving it on to the Lloyds Platinum 24-month card, which only has a 1.5% fee. This would save you £1,066 in interest compared to keeping the deal on a card with the average interest rate of 19% APR.

Plus, if you pay off £207 a month, you'd be debt- free in just two years. In comparison, if you left your debt on a standard credit card with a 19% APR and paid off £180 a month it would take you a whole year longer to pay off your debts.

"If you are transferring an existing debt on to a credit card, then make sure you aim to pay off the balance in full by the end of the promotional period and set up a direct debt for the monthly repayment as failing to pay on time may result in the loss of the promotional deal," warns Mountford.

Before you apply for either of these credit cards, check to see if you are likely to be accepted first. In fact, 70% of people considered to have good credit are rejected when they apply for a credit card, according to Will Becker, chief executive of credit card comparison site, and every rejection makes it less likely another card will accept you.

Tap your details into the eligibility checker tools at or first and they'll show you which cards are most likely to accept you.

Time shaved off debt: 12 months
Saving: £1,066

Get the advertised APR

Increase your chances of getting the advertised APR by taking a look at your credit record before you apply and make sure it is in the best possible shape.

Once you've done that, use the eligibility checkers offered by the likes of to see which loans you are likely to be accepted for. Once you've put your details in, you'll be shown the percentage likelihood of you being accepted, the higher the percentage the better your chances.

These percentages show how likely you are to be accepted, not how likely you are to get the advertised rate. But go for the loan you have the highest chance of acceptance for and you stand more chance of getting the advertised APR.

I owe less than £5,000 on loans and overdrafts

If you owe money on other forms of debt to a credit card, a personal loan can seem like your only option. It's not. "For borrowing smaller amounts, it may be more economical to look for a market-leading credit card with a money transfer facility," says Becker. "Many offer 0% for well over a year, so could work out much cheaper for short-term borrowing."

Top deals are only available to those with excellent credit histories recent months, it seems loan providers have entered a lending frenzy in a bid to maintain or grow their market share, enticing consumers with table-topping deals," says Becker.

It's now possible to borrow up to £7,500 over five years and pay just 4.8% APR interest, or £930, with Zopa. That's £910 cheaper than borrowing the same amount at 9% APR.

Most balance transfer credit cards only allow you to use the card to pay off other credit card debts. However, credit cards with a ‘money transfer' facility allow you to transfer money from your credit card into your bank account, paying off loans and overdrafts.

These types of cards also offer long 0% interest periods. The best on the market is the Fluid card, which has a 26-month interest-free period on money transfers with a 4% fee. Shift a £1,000 overdraft to the Fluid card and you'd save £358 in interest over two years (based on the average overdraft rate of 19.9% APR and assuming you made no repayments during that period), and could clear the debt by paying off £42 a month. It would take seven months longer to clear the debt if you left it on an overdraft.

Time shaved off debt: seven months
Saving: £358

Our pick of the bunch

Longest 0% balance transfer card Barclaycard Platinum Credit Card with Extended Balance Transfer 0% for 28 months on balance transfers with a 2.99%fee
Low-fee balance transfer card Lloyds Platinum 24 Month Card 0% for 24 months on balance transfers with a 1.5% fee
Longest 0% money transfer card Fluid Balance Transfer Card 0% for 26 months on balance and money transfers with a 4% fee
Low-rate loan £5,000-£7,500 Zopa 5.6% APR for three years
Low-rate loan £7,500+ Zopa 4.8% APR for five years

I owe more than £5,000

If you owe more than £5,000, it's unlikely you'll get a credit card with a high enough limit to help and a personal loan will probably work out cheaper. "Over recent months, it seems loan providers have entered a lending frenzy in a bid to maintain or grow their market share, enticing consumers with table-topping deals," says Becker.

It's now possible to borrow up to £7,500 over five years and pay just 4.8% APR interest, or £930, with Zopa. That's £910 cheaper than borrowing the same amount at 9% APR.

The key to finding the cheapest loan for you is to know exactly how much you need to borrow and try to repay it in the shortest amount of time possible. For example, if you could only repay £7,500 over seven years instead of five, the best possible rate would rise to 5.8% from the AA, costing you an extra £668 in interest.But you might not necessarily be offered these rates.

"These deals are only available to those with good or excellent credit histories," says Mountford. "So, if yours is less than perfect, you may not receive the deal being advertised." Lenders only have to offer the advertised rate to 51% of successful applicants, which means you may apply for a loan thinking you'll save money only to discover once your application has been approved that you're paying more interest than you expected.

Time shaved off debt: two years
Saving: £910

How to get help

If your debts are causing you to lose sleep at night, or you're worried you won't be accepted for any of the products mentioned in this article, it can pay to get professional help.

"If you're starting to have problems with your debts you should make a budget, prioritise your debts and talk to people, especially the people you owe money to," says Jane Symonds, spokesperson for the Money Advice Service. "There is no need to struggle in silence, or go it alone."

You can get free, confidential help with budgeting or working out a successful debt repayment plan from the National Debtline on 0808 808 4000 or by visiting, or from StepChange on 0800 138 1111 or at