Don't drown in credit-card debts

Ruth Jackson investigates the best way to clear your credit-card debt, and explains the golden rule of zero-percent-interest cards.

Paying off a £5,000 debt on a Barclaycard could now take nearly 100 years. Britain's largest credit-card issuer has announced that some of its near-12 million customers will have their minimum repayment cut from 2.25% to 1.5%. "We are doing this to help," a spokesman for the company told The Daily Telegraph. "We understand that some customers may appreciate this additional flexibility during the current economic circumstances."

That's all very well. But if customers actually take advantage of the new minimum repayment level, they'll find themselves stuck in debt for far longer and paying a lot more interest. For example, a £5,000 debt paid off at the old minimum repayment of 2.25% would take 31 years and accrue total interest of £5,900 over the period. At the new 1.5% rate, the same £5,000 debt would take 98 years to repay and accrue £22,300 in interest in the process. So what's the best way to clear your credit-card debt?

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Ruth Jackson-Kirby

Ruth Jackson-Kirby is a freelance personal finance journalist with 17 years’ experience, writing about everything from savings accounts and credit cards to pensions, property and pet insurance.

Ruth started her career at MoneyWeek after graduating with an MA from the University of St Andrews, and she continues to contribute regular articles to our personal finance section. After leaving MoneyWeek she went on to become deputy editor of Moneywise before becoming a freelance journalist.

Ruth writes regularly for national publications including The Sunday Times, The Times, The Mail on Sunday and Good Housekeeping, among many other titles both online and offline.