Smart credit card payments could help clear your balance sooner

Are you making your credit card work for you? Credit cards can be a flexible way to borrow money, but not everyone knows just how flexible they can be. Every month you can spend any amount up to your credit limit, but the repayment amount is flexible too.

Man checking his repayments using the repayment calculator

Making at least the minimum monthly payments is essential to avoid late fees and charges, but you could pay above this amount to be charged less interest or even no interest at all.

What’s more, even small increases to your repayments can make a big difference to how long it takes to clear your balance, helping you to feel more confident with your finances.

Three credit card repayment styles

What’s your credit card repayment style? Don’t worry, this isn’t like a personality quiz in a glossy magazine. It just means everyone has their own way of paying off their credit card depending on their personal situation and preferences.

Credit card interest is one of those ‘only if you have to’ things. The best way to avoid it is by clearing your balance in full each month. But when the realities of life make that tricky, here are three other approaches you might take.

Paying just the minimum

Credit card providers set a minimum payment based on your outstanding balance and interest rate. This is how much you have to pay each month to avoid extra charges on top of your interest payments. You can find out what your minimum payment is by using the Barclaycard Interest Calculator.

If you can afford to, it’s always a good idea to make more than the minimum payments. You’ll pay less in interest and clear your credit card balance sooner.

The problem with only making the minimum payment is that it’s usually calculated as a small percentage of what you owe. As you gradually chip away at your balance, the minimum amount gets smaller which means the total repayment time stretches on and on.

Paying a fixed amount

Another option is to pay back a fixed amount that you can afford each month. You will need to ensure that the amount you choose to pay is above the minimum payment amount listed on your statement in the first month. Not only will this help you to avoid incurring fees and affecting your credit rating, but it can also help you to clear your balance quicker – as long as you keep paying the fixed amount each month.

That’s because as the minimum payment decreases over time, your payments stay the same. Assuming you don’t spend more on the card, this will mean that more of your payment will go towards clearing your balance and less will be spent on interest.

Try using the Barclaycard Repayment Calculator to work out how long it’ll take to pay off your credit card balance and how much you could cut down on interest by increasing your monthly payments.

Varying how much you pay each month

Life isn’t always as predictable as a fixed monthly repayment. For example, around Christmas you might be a bit more strapped for cash than usual. At other times, it may be much easier to pay off more of your balance. You always need to pay at least the minimum, but if you are able to pay the full balance, you will benefit from paying no interest.

Try using the Barclaycard Repayment Calculator to work out how long it’ll take to pay off your credit card balance and how much you could cut down on interest by increasing your monthly payments.

Paying a little more to clear your credit card balance faster

When deciding how much to repay on your credit card you might think that paying back £1 a day more would make little difference. But it could have a big impact.

Imagine again that you have an outstanding balance of £2,500 on a card with a 19.9% annual interest rate. If you only paid the estimated minimum payment of £63 each month, it would take 26 years and 2 months to clear it, costing £3,614 in interest.

But by increasing your repayments to a fixed payment of £93 each month, you’d be debt free in 2 years and 11 months, and pay £2,874 less in interest.

If you’re currently paying interest, then a balance transfer could be another way to clear your balance much sooner.

Moving your existing balance to a Barclaycard credit card that offers a 0% interest promotional period can make your monthly repayments more affordable.

Although there’s usually a fee for moving your balance, a balance transfer credit card with an interest-free offer can be a great way to avoid interest payments and focus on clearing your balance as quickly as possible. Learn more about how balance transfers work.

Other smart money management tips

There are ways to make bigger purchases or access cash in a hurry that could help you avoid paying more in fees and interest than you have to, and help you clear your credit card balance faster.

For example, you could spread the cost of big purchases with an instalment plan. If you’re planning to buy shiny new gadgets or other big-ticket items, you can spread the cost by paying an equal monthly repayment amount. Barclaycard’s 0% interest instalment plan can be used on purchases between £100 and £5,000, for a one-off fee. The equal monthly payments can help you keep your monthly budget on track.

If you need to quickly access some cash, such as to pay a plumber to fix a leak in the kitchen, a money transfer could be a good option to avoid pricey withdrawal fees. You can move credit from your Barclaycard to your current account for a fee that’s usually between 1.9% and 2.9%. Just remember that any money you transfer into your current account will no longer benefit from purchase protection. 

Clear your balance sooner with one-off payments

We can all be a bit strapped for cash sometimes, such as around Christmas, but when you’re feeling secure in your spending, make hay while the sun shines. Pay a bit extra alongside your credit card repayments to chop big chunks off your credit card balance and further reduce your interest payments.

Keep monthly payments on track using a Direct Debit

It’s always a good idea to set up a Direct Debit when making recurring monthly credit card payments. This way, you’ll never miss a payment and don’t have to worry about being charged late fees. If you want to change your payment method, you can do so through your Barclaycard Online Servicing account or by using the free Barclaycard app.

What’s next?

Any extra money that you can put towards your credit card repayments means you’ll clear the balance faster and pay less interest. The Repayment Calculator can help show how much less interest you’ll pay by increasing your payments a bit more each month.

Try our Repayment Calculator