Best Financial Markets Analysis Article Being faced with a chunky credit card bill is a daunting prospect and if you only ever make the minimum repayment it could take you a long time to get back in the black.

A small increase in monthly payment can make a big difference to the time taken to clear your debt.

moneysupermarket.com today urges borrowers to consider making larger repayments rather than just the minimum direct debit amount, and pay off their debt in a faster and cheaper way.

A borrower with a £1,000 balance on a credit card at 16.9 per cent APR, only paying the minimum repayment of two per cent for 12 months, will rack up £151.74 in interest, and the total balance will only be down to £920.60. However, by paying £50 a month (five per cent each month) they will pay nearly £30 less interest, and decrease the overall balance by nearly £400.

Even better - for those that can afford it, paying £100 (10 per cent) for a year on the same credit card balance, will mean in 12 months time they will be debt free, and will only have paid £79.16 in interest - almost halving the interest they would have paid if they only made the minimum repayments.

Peter Harrison, credit card expert at moneysupermarket.com said: "Most banks will allow you to set your direct debits at the minimum repayment amount or more, and if you opt to increase your repayment amounts you will reduce your debt and the interest paid significantly. Even if you are with one of the few lenders that won't allow you to set you direct debit higher than the minimum repayment, you can set up a standing order at a larger monthly amount. Borrowers can even step up payments on months where they have some extra cash."

By moneysavingsupermarket.com

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Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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