Make your debt work for you.

New figures show that paying for goods with credit and charge cards is more popular than ever, with the number of card payments rising by 12.3% over the last year. Indeed, the rate of spending on credit is growing five times faster than earnings. While this credit boom is causing the Bank of England some disquiet, we all know the affect it has on individuals who are struggling to pay off their debts: sleepless nights and a feeling of being trapped in a spiral of increasing charges.

What can you do to eliminate your debt if you’re juggling several card repayments?

• Get real: how much do you really owe? Look at the true amount you need to repay. Face it down - own it -  and it won’t feel like a scary bogeyman anymore.
• Make a plan: once you’ve decided what you can afford to pay off each month, start by putting any extra cash towards the card with the highest interest rate, while paying the bare minimum on the others. But don’t fall into the trap of panic-splurging £1,000 towards your scariest card debt if in reality you can only afford £100, or you’ll run out of money for day-to-day expenses and just end up using credit to pay for dinner again.
• And speaking of dinner…: imagine how much lighter your card repayments would feel each month if you stopped eating at restaurants for a while? If that sounds like hell on earth, how about pledging no takeaways (including coffee and lunches) for a month? And when you do buy something expensive – something for the house, say – make it the best quality you can afford. It really is an investment if it means you won’t be replacing it in five years’ time. And it’s more fun shopping at Heal’s than Ikea, right?
• Make your cards work for you: If you do have to use your credit card (and remember, it’s not in the interest of your credit score to close down all your cards completely), make sure it’s a card that rewards you for your custom. Collecting enough airmiles to fly business class next time you travel will make you feel less like a naughty debtor and more like the in-control queen of personal finance that you truly are!

Photo by Alice Pasqual on Unsplash.