Take control of your debt

The rising cost of living has taken a grip recently, and many households are now feeling the pinch as energy prices, National Insurance, council tax and other everyday essential costs go up.

One in three people* admit that they are struggling with essential bills and credit payments. If you are worried about keeping up with payments or falling into debt, then there are some things you can do now to start tackling it.

WORK OUT WHAT YOU OWE

List all your debts and work out how much it is costing you by looking at the annual percentage rate (APR). Aim to shift the debt with the highest APR as fast as possible, as this is costing you the most. But be sure to make minimum payments on all your other debts first, including priority debts which should never be ignored.

Your important, priority debts include: mortgage or rent payments, secured loan arrears payments, utility bills, council tax, TV licence, tax payments, higher purchase agreements, child maintenance, missed payments owed to the government and any court fines.

SHIFT TO A 0% INTEREST

BALANCE TRANSFER CARD

If you have credit card debt and are paying interest, then shifting it to a 0% balance transfer credit card could save you hundreds of pounds. Some providers offer as much as 33 months interest free, meaning you can chip away at your balance without extra costs.

There is a transfer fee, so make sure you do the maths first and find out how much it is. Use an eligibility checker to make sure you are accepted – the top 0% deal will require a good credit score.

GET SOME BREATHING SPACE

If all you need is a break to get back on your feet, then you may be able to use the government’s breathing space scheme, which lets you temporarily stop payments for 60 days without facing any charges from creditors. To be eligible, you must live in England or Wales (in Scotland it’s called a Statutory Moratorium period) and have at least one qualifying debt, such as a credit card, rent, overdrafts, utility bills, mortgage or tax payments.

Apply via a debt charity, such as Stepchange (stepchange.org) or the National Debtline (nationaldebtline. org). But remember, this is only a break in payments – you will have to make up for the payments once the breathing space period ends.

CONSOLIDATE YOUR DEBT

If you have multiple debts, such as credit cards, buy now pay later, or personal loans, then you could bring them all together into one pot with a debt consolidation loan.

But do remember, consolidating debt is not right for everyone; be sure that you can afford the monthly repayments and that you are reducing your costs. If you have a low credit score and a lot of debt, then again it may not be your best option. Use the Stepchange calculator (stepchange.org/debt-info/debt-consolidationcalculator.aspx) to see if this is the right option for you. You should also seek financial advice first.