Use this when
You can afford at least the contractual minimum and want to compare a fixed repayment plan against drifting with minimum payments.
How the balance starts moving
| Month | Payment | Interest | Balance left |
|---|
What this does and does not tell you
Pause and get help when
The minimum payments are already unaffordable, you are using new credit to pay old credit, or priority bills are being missed.
Useful guidance
Frequently asked questions
The questions readers most commonly ask about this topic. Each answer is reviewed by the UK Tax Drag editorial team against current HMRC, FCA and MoneyHelper guidance.
▸ Why do minimum payments take so long to clear a balance?
Minimum payments are typically set at 1-3% of the outstanding balance, but interest charges of 20-40% APR mean almost all your payment goes to interest, not principal. On a £3,000 balance at 24.9% APR paying just the minimum, you might pay over £4,500 in interest and take 20+ years to clear it. Paying a fixed amount (even just slightly above minimum) dramatically shortens the timeline.
▸ Should I pay off credit cards before saving?
Almost always yes if the card rate exceeds 8-10%. Cash savings rates in 2026 sit around 4-5% pre-tax; credit card rates are 19-40%. Mathematically, clearing a 24% APR card debt is equivalent to a guaranteed 24% return — far better than any savings account. The exception is a small emergency fund (£500-£1,000) which prevents using the card for unexpected expenses.
▸ Is a 0% balance transfer card worth it?
Often yes, if you have a clear plan. Most 0% balance transfer offers charge a one-off fee of 1-4% of the transferred balance. If you'll clear the balance within the 0% window (typically 18-30 months), the fee saves significant interest. The trap: people transfer and then run up new debt on the original card. Set up a fixed monthly direct debit to clear the new card on schedule.
▸ Does paying off credit cards improve my credit score?
Yes, but slowly. Credit utilisation (balance ÷ credit limit) is a major factor in UK credit scores. Keeping utilisation below 30% per card helps; below 10% is even better. Closing an account after payoff can paradoxically hurt your score by reducing total available credit. Generally: pay it off, keep the account open, use it occasionally for small purchases paid in full.
▸ What happens if I miss a credit card payment?
A late payment fee (£12-£15 typical), the balance starts accruing interest from the statement date, and after 30 days a missed payment marker appears on your credit file for 6 years. After 3-6 months of missed payments, the card issuer may default the account — a more serious credit-file event. If you're struggling, call the issuer BEFORE missing a payment; most will agree a payment plan that's less damaging than default.
▸ Should I close old credit cards I don't use?
Usually no. Closing cards reduces your total available credit, which can raise your utilisation ratio on other cards and hurt your score. Closing your oldest card also reduces the average age of your credit history. Keep no-fee cards open even if dormant; consider closing only annual-fee cards you don't value, or accounts you no longer trust to keep secure.
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