APR stands for Annual Percentage Rate. It’s a standardised figure that includes your interest rate and certain fees, helping you compare cards. However, it doesn’t reflect how interest is calculated daily on your actual balance, which is what affects how much you’ll pay each month.
Interest is charged if you carry a balance past your payment due date. If you pay your full statement balance on time each month, most cards won’t charge interest on new purchases. But if you revolve a balance, new spending may start accruing interest immediately.
The minimum payment is the lowest amount you must pay each month to keep your account in good standing. While it helps avoid late fees and protects your credit rating, it does little to reduce your overall balance.
1. Minimum payment calculation: This is typically a small percentage of your outstanding balance—often between 1% and 3%—though exact figures vary by issuer.
2. Interest and fees: Your minimum payment may also include any accrued interest, late payment charges, or annual fees. These additional costs can increase the required amount.
3. Fixed minimum amount: Many card providers apply a minimum payment floor—commonly between £5 and £25. If the calculated percentage is lower than this amount, you’ll be asked to pay the fixed minimum instead.
For example, if your balance is £1,000 and the card requires 2%, your minimum payment would be £20. But if your card’s minimum floor is £25, then £25 becomes payable that month.
While making the minimum payment keeps your account in good order, it does not significantly reduce your debt. Relying on minimum payments alone can extend repayment over many years and result in paying far more interest overall.
Paying more than the minimum each month is one of the most effective ways to take control of your credit card debt. It helps reduce the total interest you pay, clears your balance faster, and puts you in a stronger financial position.
Use our Switch & Overpay calculator to see how much you could save by paying more than the minimum each month.
0% balance transfer offers can be a powerful tool for managing credit card debt, as they temporarily eliminate interest charges. However, they still require careful repayment planning to avoid falling into new debt traps.
1. Minimum payment: Even during a 0% interest period, you're still required to make at least the minimum payment each month.
2. Debt reduction: Since no interest is added, any payment above the minimum directly reduces your outstanding balance.
3. End of promotional period: Once the promotional term ends, any remaining balance will start to accrue interest at the card’s standard rate.
4. Fees and charges: A one-off balance transfer fee may apply, typically 2%–3%, and penalties still apply for missed payments.
Yes. 0% only applies to purchases made during the promotional period. If you miss a payment or exceed your limit, the deal may be withdrawn and standard interest charges can apply. Some other transactions, like cash withdrawals, may also attract interest even during 0% offers.
Overpaying reduces your balance and saves interest immediately. Switching to a lower-rate card reduces the cost of future interest. The most effective strategy often combines both. Try our Switch & Overpay calculator to compare options based on your situation.
While it might seem smart to repeatedly move your credit card balance to new 0% promotional offers, there are several reasons why this strategy may be risky or unsustainable in the long run.
1. Balance transfer fees: Most 0% balance transfer deals charge an upfront fee—usually around 3% to 5% of the amount moved. Over time, these fees can outweigh the interest savings.
2. Promotional period limits: Introductory 0% interest periods are temporary, often lasting between 6 and 18 months. Once they expire, your remaining balance will start accruing interest at a much higher rate.
3. Credit score impact: Each new application involves a hard credit check. Frequent applications can lower your credit score, and constantly opening and closing accounts may reduce your average account age—another scoring factor.
4. Temptation to spend more: The availability of 0% deals can create a false sense of security. Some borrowers end up spending more, assuming they can always move the balance again.
5. Risk of rejection: There’s no guarantee you’ll be approved for every balance transfer. Lenders may view frequent switching as a sign of financial stress, making future approvals more difficult.
6. Tracking complexity: Managing multiple cards and expiry dates can be difficult. Missing a deadline or forgetting a payment could result in unexpected interest charges or the loss of promotional rates.
7. Balance transfer limits: Lenders often cap how much you can transfer. If your total debt exceeds this cap, you might be left juggling multiple balances across different cards.
Rather than depending on ongoing balance transfers, consider building a clear debt reduction plan. Focus on regular overpayments, cutting unnecessary spending, and setting a repayment timeline that fits your budget.
You can avoid interest by paying your full statement balance by the due date each month. Avoid using your card for cash withdrawals, as these often incur interest immediately. Using 0% deals sensibly and avoiding just making minimum payments are also key to staying interest-free.