How to pay off credit cards with bad credit

It can be difficult to pay off debt at any time, but if you’re struggling with a bad credit score, you could feel stuck. There are options available to you, even if you have bad credit, to ensure you can get your finances back on track. We look into balance transfer cards, debt consolidation, IVAs and more.

3 min read
How to pay off credit cards with bad credit

How to pay off your debt if you have bad credit

Becoming debt-free, when your history of managing money isn’t ideal, can be tough. You don’t want the weight of credit hanging over your head anymore but you just don’t know how to dig your way out of the hole you’ve found yourself in. We help people like you day in, day out, and the options we’re about to explore might be exactly what you’re after.

1. Move to a balance transfer card

If your credit card debt hasn’t reached the point where it’s totally unmanageable yet, moving your money to a 0% balance transfer card could be the way to go.

In their simplest form, balance transfer cards let you assign any outstanding debt from your current credit card to a new one that has a limited 0% interest period. That means you don’t have to pay interest on what you owe immediately, freeing up more money to put towards your actual debt. Ideally, this means you should be able to clear your debt quicker.

However, there are a few things to consider with this:

  • You’ll usually be charged an initial fee to transfer your money over. Before this deters you too much, do the maths to see how this fee compares to the amount you’d save in interest.
  • If you’ve already got a bad credit history, you might find it difficult to be accepted for this type of card in the first place.

2. Apply for a debt consolidation loan

Debt consolidation loans allow you to amalgamate multiple debts into an affordable monthly payment, so whether you’ve accumulated balances on one, two, three or four credit cards, it could be a very viable option.

How do they work? Fairly similar to a balance transfer card - all you do is transfer any existing debt with your new loan and then stick to your set instalments on time each month.

Remember: It only makes sense to move your debt if it helps you out, so while researching debt consolidation loans make sure they come with better terms - i.e. a lower interest rate.

For more on the mechanics, see how debt consolidation loans work here.

3. Contact a debt management company

This needs to be considered carefully, as there is a negative effect to your credit score and your debt arrangement can stay on your file for six years. This option is designed for people who can’t afford to repay any unsecured debt at the rate they initially arranged.

The important bits to know about this option are:

  • You’ll be able to repay your debts off at a more affordable rate.
  • Whoever you take out your Debt Management Plan (DMP) with will liaise with your credit issuers to make sure a deal’s made that you can afford to keep up with - now and in the future.
  • You no longer make payments to your credit issuers, instead, you make them directly to your DMP provider.
  • StepChange and the Money Advice Service are good places to start

4. Apply for bankruptcy

If you’re all out of options your last chance saloon could be bankruptcy - we must stress though, this decision should not be taken lightly and should only be explored if you’ve looked at every other option out there and none of them come back suitable for your circumstances.

It costs £680 to apply for bankruptcy and if you qualify, any debts you can prove you owe will be removed from your record and any assets you own will contribute towards it.

Want to learn more? See how bankruptcy can affect you.

While we can’t help with every option we’ve outlined, debt consolidation loans are our forte. Interested? See if you could be accepted and what types of deals are around today.