What is the best way to pay off credit card and overdraft debt fast?

Many young professionals today find themselves relying on credit to bridge monthly gaps. A third of UK 25-34-year-olds now have “negative wealth”, debts exceeding assets, with average net debt over £8,000. Younger adults often juggle tighter budgets (rent, student loans, bills) and report using overdrafts or loans just to make ends meet. Charities confirm this trend: about 3 million people are regularly relying on overdrafts or credit to pay essential bills. In short, you’re not alone if you’ve ever asked, “how to get out of credit card debt?”, it’s a common challenge facing many under-30s.

Understanding High-Interest Debt

Credit cards and overdrafts can seem like lifelines, but their interest rates can be very high. UK credit cards average around 23.6% APR, and overdrafts sit even higher at about 35.4% APR. Even with new rules banning sneaky fees, overdraft borrowing often costs more than credit cards. The consequence: carrying a balance can quickly compound. If you only pay the minimum each month, you’ll repay your debt very slowly and rack up a lot of interest.
Experts warn this is a danger sign. If you struggle to clear your overdraft each month, that’s often a sign of financial difficulty. Relying on high-rate credit is a short-term fix that can leave you in a deeper hole later.

Snowball vs Avalanche: Choose Your Strategy

When paying down multiple debts, two popular methods are the debt snowball and debt avalanche. Both can work, but suit different situations. The debt snowball approach pays off your smallest debts first (while making only minimum payments on larger ones). Knocking out a small balance quickly can give a sense of progress and motivation. By contrast, the debt avalanche method focuses on the debt with the highest interest rate first. Mathematically, this saves the most on interest and usually clears debts faster.

• Debt Snowball: List debts smallest to largest, and throw extra cash at the tiny balances first. You’ll pay off one card quickly and feel encouraged to keep going. This works well if you need quick wins to stay motivated.
• Debt Avalanche: List debts by interest rate, highest first. Always pay as much extra as you can on the highest-interest debt, while making minimums on the rest. This can clear your total debt faster and save on interest.

In practice, if a large high-interest card is dragging you down, the avalanche method could save you money. But if you feel stuck, building momentum with a small payoff (snowball) might keep you on track. Choose the method that helps you stay consistent and chip away at debt.

Prioritising High-Interest Debts

No matter which method you pick, it’s usually best to tackle the highest-rate debt first. For example, if one credit card has 29% APR and another 19%, pay extra on the 29% debt, you’ll avoid more interest piling up. Experts agree that paying off costliest debt first is more efficient, cost-effective and often faster. This is especially true with credit cards and overdrafts, whose rates are often double or triple those of loans.
While whittling down debt, always make more than the minimum payment when you can. Even a little extra each month dramatically cuts your interest costs. Paying only the minimum keeps your balance high and the debt slow to disappear. Each extra pound you pay goes straight to the principal, cutting out future interest. Even a small increase, say paying 1-2% extra, can save hundreds in interest over the year.

How to Consolidate Debt Wisely

Consolidating debt can simplify repayment, but it’s not a cure-all. Two common options are balance-transfer cards and consolidation loans:

• Balance-transfer cards: These allow you to move your credit card balances onto a new card, often with a 0% interest offer for a limited time. This can buy breathing space if used wisely. However, watch out for one-off fees and the end of the promotional period. Make sure the interest saved outweighs the transfer fee, and plan to pay off the debt before rates return.
• Consolidation loans: You could take out a personal loan to pay off multiple debts, leaving you with one fixed monthly payment. Loans often have lower fixed rates and a set end date, which can make budgeting easier. But this strategy only works if you stop using the old cards. If not, you might just be shuffling balances without real payoff.

Before consolidating, tally all costs: fees, new interest rate, and how long it will take to clear the new debt. And avoid using a new credit card or loan to spend more. Use consolidation to focus on repayment, not to finance extra purchases.

Paying More Than the Minimum

One of the strongest tips is: always aim to pay more than the minimum. Making only the minimum payment on a credit card feels convenient short-term, but it barely dents the debt. Minimum payments usually cover interest and a tiny slice of principal. If you only pay that, your balance shrinks painfully slowly. By contrast, each extra pound you pay goes directly to the debt, cutting future interest.
If money is tight and you can only afford the minimum, take action to change the situation: review your budget carefully, trim non-essentials, or seek a longer 0% period (like another balance transfer) to reduce the pressure. But as soon as you can, direct every spare pound at that debt.

Protecting Your Credit Score

While tackling debt, it’s important to safeguard your credit rating for the future. UK lenders check your credit report, so good habits now will pay off later. Key factors include:

• Payment history: Lenders heavily weigh whether you pay on time. Always clear at least the minimum by the due date on every card. Missing payments can stay on your record for six years.
• Credit utilisation: This is how much of your available credit you’re using. Ideally keep this under 30%. If your credit limit is increased, it may help your score, but only if you do not use that extra credit.
• Length and mix of credit: Longer credit history is better. It can help to keep old accounts open (with zero balance) rather than closing them.
• New applications: Don’t apply for many cards or loans in a short time. Use eligibility checkers to avoid being declined.
• Electoral roll: Being registered to vote at your current address can help confirm your identity and improve your score slightly.

By paying bills on time and keeping balances low, you can improve your credit score even as you repay existing debt.

Common Pitfalls to Avoid

As you work on debt, be mindful of traps that can derail progress:

• Ignoring statements: Always review your monthly statements for changes or charges.
• Increasing your credit limit just to borrow more: This can backfire and deepen debt.
• Paying just the minimum: It keeps you in debt for longer and costs far more in interest.
• Treating consolidation as a free pass: If you do not stop spending, the debt returns.
• Looking for a magic bullet: There’s no quick fix. Debt repayment takes time, but steady progress works.

Focus on consistent effort: pay more than the minimum, prioritise expensive debts, and avoid taking on new credit. With structure and patience, you can rebuild your financial confidence and begin your debt-free journey.

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