Paying off a credit card by a set date

Why a date works

A card’s minimum payment falls as the balance falls, so paying only the minimum stretches the debt out for years. A fixed payment doesn’t fall, so more of it comes off what you owe each month, and the end date is set from the start. Choosing the date first, then the payment, turns “I’ll pay it off when I can” into a plan you can check.

Worked example

£3,000 on a card at 24.9% APR, with nothing new spent:

Each extra year costs more interest, and the saving from a shorter time gets bigger the higher the rate. The last payment is usually a few pence less, because the regular one is rounded up to the penny.

Work out your own payment →

Choosing a date you can keep

• Start from your budget. Work out what’s left each month after essentials, and pick the shortest time that payment allows, rather than the shortest time full stop.
• Keep something aside. A small emergency fund stops an unexpected bill going straight back on the card and undoing the plan.
• Check it’s above the minimum. You have to pay at least the minimum each month. Over a year or two the plan nearly always is; over five years, check it against your statement.
• Stop adding to it. Anything new you spend goes on the balance and moves the date. Many people use a debit card while they clear a credit card.

Making the payment smaller

A lower rate means less of each payment goes on interest. Moving the £3,000 to a balance transfer card at 0% for 12 months, with a 3% fee, means £3,090 to clear: £257.50 a month does it in the year, against £281.43 at 24.9%, and the £90 fee is the whole cost, against £377 of interest. The catch is clearing it before the 0% ends; whatever’s left is then charged the card’s standard rate.

A personal loan can do the same job with a fixed payment and a fixed end date. The balance transfer vs loan calculator compares the two with staying put.

If you can’t keep up

Tell your card provider before you miss a payment: it has to treat you fairly and consider what you can afford. If you’ve paid more in interest and charges than you’ve repaid for a long time, the persistent debt rules mean it has to help you find a way to clear it. Free, confidential debt advice is available from MoneyHelper, StepChange, National Debtline and Citizens Advice.