If you have a £2000 credit card debt or more, it can feel like there is no easy way out. Stress and anxiety can build up and it can even ruin relationships.
However, there are many workable solutions to end your credit card debt and get your personal finances back on track, including:
- Balance Transfers
- The Snowball Method
- Debt Management Plans (DMP)
- Credit Card Debt Support
This post will walk you through the options at your disposal. Not every debt solution will be perfect for your situation, but nearly everyone can eventually escape a £2000 credit card debt with one of these methods.
£2,000 Credit Card Balance Transfers
One of the most popular ways to deal with credit card debt is through a credit card balance transfer. This works by applying for a new credit card (which will require a credit check) and then transferring the money you owe from your existing credit card to the new one. If you transfer debt from more than one credit card, this is known as consolidating your debts.
But, why would you do this?
The reason for doing this is because opening a new credit card with a lower interest rate will allow you to reduce your payments. Many credit cards come with a 0% interest rate for the first few months, meaning you could enjoy a holiday from interest payments.
However, this should not be the only consideration before transferring to a new credit card. You should consider how the new credit card will affect your (minimum) payments over the long haul, and also account for any balance transfer fees that are often applied.
Other considerations before opting for a balance transfer include:
- Note the difference between purchase offers and interest fee offers. You may receive 0% interest for a limited time on both of these, but they do not the same thing.
- Check the fees for withdrawing cash from the credit card if this is something you may need to do.
- Make sure you can make a balance transfer from your current credit card issuer. Some banks do not allow balance transfers from some credit cards, often when they are the issuer of both types of credit cards.
Just like this MoneySavingExpert forum user found out…
“I signed up to the NatWest 28 month balance transfer credit card, not realising that I can’t transfer my current NatWest credit card balance to it as the transfer cannot come from another NatWest account.”
Mistakes like these can be costly and frustrating. By reading our advice and consulting the information on Money Nerd, you can avoid these headaches.
Two Other Credit Card Debt Solutions
There are two other popular ways to get out of debt. Sometimes finding all the different strategies can be overwhelming, but only by knowing what is available will you be able to end your £2000 credit card debt.
Below are two of the best credit card debt solutions.
#1: The Snowball Method
If your credit card debt is not the only personal debt you have, the snowball method may be your best option. It works by repaying the minimum amount on each of your debts and using any leftover funds to make additional payments to your smallest debt. It can even improve your credit score!
For example, if you have a £2000 credit card debt and another credit card debt of £500, you should make the minimum payment to both credit cards and use any remaining money to pay off the £500 credit card debt.
You should make these payments even if your £2000 credit card debt has a higher interest rate. The overall goal of this method is to snowball payments to clear one of your debts, rather than to clear debt quickly or as cheaply as possible.
Some criticism of this method is that you end up paying more or taking longer to clear debt. Nevertheless, it is highly effective and has already helped thousands of people with more than one personal debt.
For more information on this debt strategy, and how to use it, consult this Snowball Method guide!
#2: Debt Management Plans
If you are not able to make the minimum repayments on your £2000 credit card debt, or any other unsecured debt, you could use a Debt Management Plan (DMP) to make them affordable again.
How does this work? You first need to work out how much money you can afford to repay each month. Don’t skip the importance of this part as it will be crucial to the end result and getting your creditor to lower their minimum repayments. You should take the time to calculate the exact money you can realistically pay back.
You may want to get the help of a professional or debt management company to do this.
Once you have calculated a figure, you can take your proposal to your credit card company/bank and make the proposal. They are not obligated to agree but they often will reduce your interest and minimum payments. Note, this means you are likely to pay less but for a longer period.
There is no obligation for your credit card issuer to accept your proposal and they are not likely to agree if you make a proposal without careful consideration of what you can realistically pay back. This is also an informal agreement and they could change their mind if you fail to stick to the new agreement.
Further information can be found on this DMP guide.
Choosing Between the Snowball Method and DMP
The two methods described above are effective ways to get out of credit card debt. However, there is a key difference between them. The snowball method is suitable for people who can not only afford their minimum repayments, but they can afford to pay more. On the other hand, DMPs are for people who cannot make minimum repayments. This is a significant difference and will tell you which method is best for you.
Additional Support for People with £2000 Credit Card Debt
The main options for tackling credit card debt have been explained above, but it can still be stressful when trying to get your head around your options and which one to choose.
That’s why it might be worthwhile to speak with debt charities who can offer support and professional advice on what to do next. Some great debt charities you can seek advice from include StepChange and Payplan. They can confidentially discuss your options for free without any judgement.
If you are contemplating a DMP, Step Change will discuss the details with you further to make sure you know about what it will involve and any risks.
Common Questions About Credit Card Debt
Most people with a £2000 credit card debt don’t just want to know how to get out of their debt, they also want to know other risks and consequences of their situation. Below you can find some other credit card debt FAQs:
Can I go to jail because of credit card debt?
You cannot be put in prison for not paying your credit card debt, but this is not a reason to ignore your creditors. Only debts owed to the government or unpaid criminal fines can land you in jail. If any of your creditors have made jail threats because of the outstanding debt, you should report them as this is illegal.
Will my credit card debt affect my credit score?
Banks and other credit card providers will report your credit cards and activity to credit reference agencies. This means how you have used the credit card, or any unpaid credit card debt, will be reported. It will affect your credit score and may prevent you from getting credit in the future unless you build your score back up.
However, the snowball method is one way of paying off your debt and building a more positive credit score!
Is my partner also responsible for my credit card debt?
Banks do not offer joint credit cards, but they do allow credit card holders to request a second card that their spouse or partner can use. However, the second credit card user does not have any legal obligation to the debts on the card. It is solely the responsibility of the whose name the credit card is in.
Always think carefully before giving someone else use of your credit cards!
Can my credit card company sell my debt?
All debts that are regulated by the Consumer Credit Act are able to be sold to debt collection agencies. This often includes personal loans, unpaid store cards, unpaid overdraft debts and credit card debt. If a debt collection agency contacts you about any debts like these, it could be a genuine letter or call.