Several solutions can help downsize debts

Using more than one credit card – including individual store cards – can quickly become expensive and confusing as rates and fees vary wildly. Many cards offer low interest rates for an introductory period, which may jump up after a few months or if a repayment is missed.

If you have outstanding balances across a number of cards, you’re likely to end up paying more interest which is counterproductive in terms of clearing the original debts. There’s usually plenty of boring, time-consuming paperwork and small print to read for each card too, and don’t forget, time is money!

One solution which may help involves consolidating your outstanding debts by transferring all the balances on to one credit card – you’ll want to choose one with a decent interest rate and clear terms and conditions. If you succeed in finding a lower interest rate than you currently pay, this strategy can lower your repayments significantly, and by having everything on one statement it should also make it easier to keep track of your finances. Naturally, a balance transfer is also worth considering if you have just one debt to pay off and are simply looking for a better deal.

Some card providers advertise 0% balance transfers which means that you can pay off existing balances interest free for a limited period. This can save you money as long as you’re attentive to the small print and note when the introductory period ends, what the standard rate will be thereafter and whether there are hidden costs: one-off handling fees, high repayments on new purchases, minimum monthly spend clauses and so on. If you plan to embark on a bit of ‘card hopping’ to take advantage of these special offers, you should also bear in mind that applying for lots of different cards may adversely affect your credit rating with certain companies.

An alternative strategy is to find a provider offering a fee-free balance transfer to a card which has a good interest rate with no fixed end date – so you pay the same rate until the balance has been paid off in full. This can be much less time-consuming and stressful than chopping and changing, and when you take the handling fees (or lack of) into account, may even work out cheaper too, so be prepared to do a bit of maths!

It’s best to shop around and have a look at what your current card issuer has to offer; they’ll want to keep your business, so if you can talk to an advisor you may find that they have some great offers just for current customers and you don’t even need to apply for a new card.

The world of personal finance can be complicated and even daunting because there are so many different plans and providers available, but if you set out with a clear idea of your requirements and seek good impartial advice, you can take advantage of this freedom of choice to save yourself money and time.