Around two in five UK adults currently hold some form of unsecured debt, according to the FCA’s Financial Lives survey. That’s credit cards, personal loans, overdrafts, store cards, and catalogues — the kind of borrowing that racks up interest month after month. For someone carrying £5,000 on a credit card at 22.9% APR and making only minimum payments, the interest alone could stretch repayment well beyond a decade. The numbers add up fast, and the longer they sit, the more they cost.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
The difference between getting out of debt in three years versus ten often comes down to knowing which debts to tackle first and what tools exist to cut the cost of borrowing. Many people pay far more interest than they need to simply because they don’t realise a 0% balance transfer or a debt consolidation loan could halve their repayment timeline. Others miss out on free debt advice that could lead to a formal solution like a Debt Relief Order or an Individual Voluntary Arrangement. The research is clear: 61% of people who sought debt help took action as a result. The first step is knowing what’s available.
Here’s what you actually need to know.
Before diving into the numbers, it helps to understand one key term you’ll come across in any debt repayment plan.
How interest rates and repayment timelines actually work
The single biggest factor in how long it takes to clear debt is the interest rate attached to each balance. A credit card at 29.9% APR grows far faster than a personal loan at 7.9%, yet many people spread their extra payments evenly across all debts. That approach costs more in the long run. The table below shows what happens to £10,000 of mixed debt under different repayment strategies.
→ Scroll right to see all columns
| Strategy | Time to clear £10,000 | Total interest paid |
|---|---|---|
| Minimum payments only | 10+ years | £5,000+ |
| Avalanche (highest rate first) | ~3 years | ~£1,800 |
| 0% balance transfer + avalanche | ~2.8 years | ~£400 |
The avalanche method works by paying the minimum on every debt, then putting any extra money toward the balance with the highest APR. Once that’s cleared, the extra moves to the next highest. On a typical mix — a credit card at 29.9%, another at 22.9%, and a loan at 7.9% — the high-rate card gets the extra payments first. That’s where the most interest accumulates, so tackling it first saves the most money.
For those who prefer motivation over pure maths, the snowball method targets the smallest balance first regardless of rate. On a debt stack of £800 at 19%, £1,200 at 29.9%, and £3,500 at 22.9%, the £800 balance gets cleared first. That quick win can keep someone on track who might otherwise give up. The trade-off is that more interest accrues on the higher-rate debts while the smaller one is being paid off.
Where people slip up and how to fix it
Treating all debts as equal
The most common mistake is dividing extra payments equally across all debts. That feels fair but costs more. On a £10,000 debt stack, spreading extra payments evenly adds roughly £1,200 in extra interest compared to the avalanche method over three years. The fix is simple: list every debt with its APR, rank them highest to lowest, and put every spare pound toward the top one while keeping minimums on the rest.
Ignoring priority debts while paying credit cards
Rent arrears, council tax, and energy bills carry enforcement powers that credit cards don’t. Miss a council tax payment and bailiffs can be instructed. Fall behind on rent and eviction is a real risk. The research from Citizens Advice is clear: priority debts must be dealt with first, even if the interest rate on a credit card looks scarier. If you’re behind on any priority bill, contact the creditor immediately and seek free debt advice before putting money toward non-priority debts.
Using a consolidation loan without changing habits
Consolidating multiple debts into one loan at a lower rate can make sense, but only if the underlying spending doesn’t restart. The FCA’s data shows that a significant number of people who consolidate end up with both the new loan and fresh credit card debt within two years. The fix: close the old credit accounts after consolidation, remove saved card details from shopping sites, and build a budget that accounts for the new monthly payment.
Not checking eligibility for formal debt solutions
Many people struggle on with minimum payments for years without realising they qualify for a Debt Relief Order (DRO) or an Individual Voluntary Arrangement (IVA). A DRO is available for those with under £30,000 in unsecured debt, assets under £2,000, and spare income under £75 per month. An IVA typically requires debts of £10,000 or more and offers a legally binding 5–6 year repayment plan with the remainder written off. Both affect your credit file but can provide a clean exit that minimum payments never will.
Checklist before considering a formal debt solution:
- Have you listed all debts with balances, rates, and minimum payments?
- Have you contacted a free debt advice service (StepChange, National Debtline, Citizens Advice)?
- Have you checked if your total unsecured debt is under £30,000 (DRO eligibility)?
- Have you confirmed your spare monthly income is under £75 (DRO eligibility)?
- Have you considered whether a DMP or IVA better fits your situation?
Building your repayment plan from the ground up
Step one: separate priority from non-priority debts
Start by listing everything you owe, but split them into two groups. Priority debts include rent or mortgage arrears, council tax, gas and electricity bills, court fines, child maintenance, and HMRC debts (income tax, VAT, National Insurance). Non-priority debts are credit cards, personal loans, overdrafts, store cards, catalogues, and money owed to family. The priority list gets paid first, every time. If you can’t cover both, contact the priority creditors immediately to negotiate a payment plan — most are required by FCA rules to treat you fairly if you engage early.
Step two: choose your repayment method
Once priority debts are under control, decide between avalanche and snowball. If you have a £1,200 credit card at 29.9%, a £3,500 loan at 22.9%, and a £5,000 loan at 7.9%, the avalanche method targets the £1,200 card first. That card alone could cost over £350 in interest per year if left. Paying it off in six months saves roughly £175 in interest. The snowball method would target the smallest balance first — in this case the same £1,200 card — so both methods agree on the first target here. Where they diverge is when a smaller balance has a lower rate than a larger one. In that case, avalanche saves money and snowball saves motivation.
Step three: cut the cost of existing debt
Two tools can dramatically reduce what you pay. A 0% balance transfer moves credit card debt to a new card with a promotional 0% interest period, typically 18–24 months, for a one-off fee of 2–4% of the transferred amount. On £3,000 at 22.9% APR, that saves roughly £1,400 in interest over two years compared to the standard rate. A debt consolidation loan combines multiple debts into a single monthly payment at a lower rate. The key is ensuring the new rate is genuinely lower and that you don’t extend the term so far that you pay more in total. If you’re considering either option, it’s worth speaking to a professional through a service like JustAnswer Finance to check the numbers against your specific situation.
Step four: build a buffer before overpaying
The research from StepChange recommends keeping at least £1,000 in an emergency fund before putting extra money toward debt. Without that buffer, an unexpected car repair or boiler breakdown forces you back onto credit cards at high interest, undoing your progress. Once the £1,000 is in place, every extra pound goes to the highest-rate debt. If you have savings earning 4% and credit card debt at 20%, paying down the debt is effectively a 16% return on that money — far better than any savings account can offer.
What’s changing: the FCA’s evolving approach to forbearance
The FCA’s 2024 Financial Lives survey highlighted that forbearance — the leniency lenders offer to struggling borrowers — is under increasing scrutiny. The regulator expects lenders to offer tailored support, including payment deferrals, reduced interest rates, and fee waivers, before moving to enforcement. If you’re struggling, contact your lender and ask specifically about their forbearance options. The FCA’s rules require them to consider your circumstances, but you have to ask. This is an area where the rules are tightening in favour of borrowers, but only those who engage early benefit.
Frequently asked questions
Can I get a 0% balance transfer card with bad credit? ▾
What happens if I miss a payment on a Debt Management Plan? ▾
Does a Debt Relief Order affect my ability to rent a home? ▾
Should I use my ISA savings to pay off debt? ▾
Can I include a car loan in an IVA? ▾
What’s the difference between Breathing Space and a DRO? ▾
The real cost of waiting another month
The research shows that every month of minimum payments on high-interest debt adds roughly 2% to the total balance in interest alone. On £5,000 at 22.9% APR, that’s about £95 in interest per month. A three-month delay in starting a repayment plan costs nearly £300 in extra interest — money that could have gone toward the principal. The FCA’s data also shows that 61% of people who sought debt help took action, meaning the remaining 39% didn’t. The difference between those groups is often just one conversation with a free adviser. If this was useful, you might also want to read Why UK Credit Scores Are More Important Than Ever.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
Sources and Further Reading
Conquer Your Financial Fears: Practical Steps for UK Investors — A broader look at building financial confidence beyond debt repayment.
Financial Freedom in Your 30s: Is It Possible in the UK? — How debt repayment fits into a longer-term financial independence plan.
FCA (2025). Financial Lives Survey 2024: Forbearance and debt advice. 🔗
Citizens Advice. Work out which debts to deal with first. 🔗
FCA (2025). More people have bank accounts but one in ten have no cash savings. 🔗
Pocketwise (2025). How to get out of debt in the UK. 🔗
