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Slash debt to 0% for 2 years

If you have a New Year debt hangover, it is time to take a long, hard look at your finances, starting with the debts themselves. Try not to worry about telling your partner/family about debts. If the issues are severe, why not go first to a free debt counselling agency instead of telling them just the problem, you may be able to bring a solution too.

In the first place you could consider shifting existing credit card debts to a 0% rate for 2 years (3.2% fee) with Barclaycard. A balance transfer is where you get a new card that pays off debt on existing cards so you owe it instead. This is the longest-ever 0% deal launched but please note that this is for new customers only. Here it is together with alternatives (please note that all will require you to pass a credit check).

Always diarise to clear the card or switch again before the 0% ends and remember they only give long 0% on shifted debt, so avoid spending on it.

Calculate the saving. A lower rate means more of your cash repays the debt rather than the interest, so it is cleared quicker. For example, repay £150 each month on a £5,000 balance at standard rates and it will cost £1,900 interest until it is cleared. Shift to the top 0% deal and it would be cleared 10 months earlier and £1,600 cheaper.

Use existing credit more efficiently. Many cards have hidden deals which, if you have room in your credit limit, let existing customers shift debts to them from other cards. For example, Barclaycard is 6.9% for life with a 3% fee.     

Repay highest interest debts first. If you have multiple credit cards, do not spread repayments evenly. Instead, find the card/overdraft with the highest APR as it's the costliest. Focus all spare cash at clearing that, paying just minimums on the others. Once repaid, shift to the next most expensive card and so on.

Debit cards can be worse than credit cards. Debit cards may feel better than credit, but for the overdrawn, there is little difference. Overdraft APRs can be higher, and bank charges, if you go over, are worse. To avoid, budget & try to cut the rate with 0% Overdrafts or shift your Overdraft to a 0% Card.

Direct debit to avoid losing 0% deals. Always use a direct debit to pay at least the minimum. This way, you'll never be late, which can mean you lose 0% deals, are fined and hits your credit file. Yet you should always repay as much as possible, then call up to pay more on top each month.

If you are in a debt crisis you can get free help. If you cannot meet minimum payments, have non-mortgage debts bigger than a year's salary or have sleepless nights worrying, you are likely in debt crisis. If so, forget the solutions above and get free, non-profit help from debt counselling such as Citizens Advice, CCCS, National Debtline and CAP. Don't worry, they're not judgemental.

The Financial Services Authority does not regulate debt solutions/counselling