If you want to know how to pay off debt, start by protecting essential bills and priority debts, make every contractual minimum payment you can afford, and direct any genuine surplus towards one selected debt at a time. Paying the highest-interest debt first normally reduces the total interest, while paying the smallest balance first can provide quicker motivational wins.
This plan is for people whose income covers essential living costs, priority commitments and minimum credit repayments. If that is not true for you, do not sacrifice food, housing or energy to make extra loan payments. Contact your creditors and use MoneyHelper’s Debt Advice Locator to find free, confidential debt advice.
Get urgent help rather than following an overpayment plan if: you cannot meet essential bills or minimum payments; your home, energy supply or essential belongings are at risk; you have received court or enforcement papers; or you are borrowing again to cover existing repayments. Deadlines on formal notices should not be ignored.
What is the best way to pay off debt?
The best repayment method is an affordable one that prevents new arrears and directs a consistent surplus towards a chosen debt. For most people who can meet all minimums, that means using the debt avalanche: overpay the eligible debt with the highest interest rate while maintaining minimum payments on the others.
Use this order:
- Pay essential living costs such as food, housing, energy and necessary travel.
- Deal with arrears and debts whose non-payment has the most serious consequences.
- Make the contractual minimum payment on each remaining debt where affordable.
- Keep an appropriate emergency buffer for near-term essential costs.
- Put the remaining repayment amount towards one target debt.
- When that debt is cleared, redirect its old payment to the next target.
The fastest-looking plan is not useful if it forces you to borrow again before payday. Review the amount after any material change to income, rent, mortgage, energy, childcare or health costs.
Should you overpay debt if you are struggling with bills?
No. Do not make voluntary overpayments while essential bills, priority debts or contractual minimums are unaffordable. Use your budget to identify the shortfall, contact creditors before the next payment is missed and obtain free debt advice.
FCA-regulated lenders must treat customers in or approaching arrears with forbearance and due consideration. Depending on the circumstances, a lender may discuss a temporary reduced payment, a longer term or action on interest and charges. Support is not automatic, and a lower payment can affect the balance, repayment term and credit file, so ask for the consequences in writing.
Our guide to negotiating with creditors explains how to prepare a budget, make a sustainable offer and record what is agreed. For broader crisis triage, read what to do when debt becomes unmanageable.
Which debts should you pay first?
Pay debts according to the consequences of non-payment before comparing interest rates. A priority debt is important because of what may happen if it is not paid, not necessarily because it has the largest balance or highest APR.
| Type of commitment | Examples | Why it comes first |
|---|---|---|
| Essential living costs | Food, current housing, energy, essential travel, medication and necessary care | These protect day-to-day health, safety and the ability to work or care for others |
| Priority debts and arrears | Mortgage or rent arrears, secured borrowing, Council Tax or rates, court fines, tax, child maintenance, energy arrears and essential hire purchase | Non-payment can lead to serious consequences such as loss of a home or essential item, disconnection, deductions, enforcement or imprisonment in limited cases |
| Contractual minimums on non-priority credit | Credit cards, overdrafts, unsecured personal loans, catalogues and payday loans | Meeting the required payment helps avoid further arrears, charges and adverse credit reporting |
| Voluntary overpayment target | Usually the highest-interest eligible debt, or the smallest balance under a snowball plan | Overpayments can reduce the repayment period and interest when the agreement permits them |
The correct order depends on the type of debt, its legal stage and the UK nation in which you live. MoneyHelper’s debt-priority guide and Bill Prioritiser explain common consequences.
How do you build a debt repayment plan?
Build a repayment plan by listing every balance and rate, calculating the money left after realistic essentials, choosing one target debt and automating payments where practical. A complete list is important because a forgotten annual bill or promotional-rate end date can overturn the plan.
Step 1: make a complete debt inventory
Collect current statements and record each creditor, balance, interest rate, minimum payment, payment date, promotional-rate expiry and any early-settlement condition.
| Creditor | Balance | Interest or APR | Required payment | Due date | Important condition |
|---|---|---|---|---|---|
| Example credit card | £2,400 | 29.9% variable | £72 | 14th | Promotional rate has ended |
| Example personal loan | £4,800 | 12.9% fixed | £160 | 28th | Ask for settlement figure before clearing |
| Example store card | £650 | 24.9% variable | £25 | 5th | No current arrears |
The figures above are illustrations, not products or recommendations. Use the interest rate and payment shown on your own agreement or latest statement.
Step 2: calculate the true monthly surplus
Subtract tax, essential household spending, priority commitments and affordable minimum repayments from reliable monthly income. Include irregular costs such as annual insurance, car repairs, school costs and replacing essential appliances by setting aside a monthly amount for them.
Our step-by-step UK budgeting guide includes a practical household budget table. If the result is zero or negative, an overpayment strategy is not currently affordable.
Step 3: choose a target and payment amount
Choose either the highest-interest eligible debt or the smallest balance. Set an overpayment amount that still leaves room for foreseeable essentials. Check whether your loan accepts partial overpayments, whether a charge applies and whether the extra money reduces the term, future payments or both.
Step 4: make the plan repeatable
Schedule minimums and the target overpayment soon after reliable income arrives, but keep sufficient money in the account for priority Direct Debits. Use calendar reminders for changing interest rates, annual bills and plan reviews.
Step 5: roll the payment forward
When the target is cleared, redirect both its old minimum and the previous overpayment to the next debt. Do not let the freed payment disappear into unplanned spending unless your household needs have changed.
What is the debt avalanche method?
The debt avalanche method means paying minimums on all eligible debts and directing extra money towards the debt with the highest interest rate. Once it is cleared, the extra payment moves to the debt with the next-highest rate.
This method normally minimises interest when balances, payments and rates behave as expected. It can take time to produce the first cleared account if the highest-rate balance is large, so track the falling balance as well as completed accounts.
For example, someone with a 34.9% card, a 24.9% store card and a 9.9% personal loan would usually target the 34.9% card first after priority costs and all affordable minimums are covered. The actual saving depends on balance calculations, rate changes, fees and the payment schedule.
What is the debt snowball method?
The debt snowball method means paying minimums on all eligible debts and directing extra money towards the smallest balance, regardless of interest rate. Each cleared balance releases a payment that is added to the next-smallest debt.
The early wins can make the plan easier to maintain, particularly when several small accounts feel difficult to manage. The trade-off is that higher-rate borrowing may remain outstanding for longer and the total interest may be greater than under an avalanche.
Which is better: debt avalanche or debt snowball?
Debt avalanche is usually better for reducing interest; debt snowball may be better for motivation and simplifying several small accounts. The best method is the one you can follow without missing essential or minimum payments.
| Feature | Debt avalanche | Debt snowball |
|---|---|---|
| First target | Highest interest rate | Smallest balance |
| Main advantage | Usually lowers total interest | Can clear an account sooner and build momentum |
| Main drawback | First result may take longer | May cost more if high-rate debt waits |
| Suitable when | Interest saving is the priority and motivation is stable | Quick visible progress helps you stay consistent |
| Never changes | Essentials, priority debts and affordable minimums still come first | Essentials, priority debts and affordable minimums still come first |
A hybrid approach is possible: clear one very small balance, then switch to the highest interest rate. Write down the rule before starting so that momentary frustration does not change the target every month.
How much can you afford to overpay?
You can afford to overpay only the money left after essential costs, priority commitments, minimum repayments and a reasonable allowance for irregular necessities. Do not base the figure on an unusually cheap month or uncertain income.
Use this simple test before sending extra money:
| Question | If the answer is no |
|---|---|
| Are current food, housing, energy and essential travel covered? | Keep the money for essentials and seek help if there is a shortfall |
| Are priority debts and formal deadlines under control? | Address these first or obtain urgent advice |
| Can every affordable contractual minimum be paid on time? | Contact the affected creditors rather than overpaying another debt |
| Is money set aside for known annual or irregular essentials? | Reduce the overpayment and create a monthly provision |
| Would a small emergency leave you needing new high-cost credit? | Retain an accessible buffer |
| Have you checked overpayment or settlement conditions? | Ask the lender for the relevant figure and effect in writing |
Income from overtime, a bonus, selling possessions or a side job can accelerate a plan, but only after tax, work costs and household needs are considered. Our guide to realistic ways to make extra money explains how to calculate the net return and avoid upfront-payment scams.
Can you pay a personal loan off early in the UK?
Yes. A UK personal-loan provider must allow full early repayment and partial overpayments, although the settlement calculation and any permitted charge depend on the agreement and amount repaid. Ask the lender for a settlement statement before paying the loan in full.
The statement should show how much is required to clear the agreement and how much early repayment would save. For a partial overpayment, ask whether it will shorten the term, reduce future instalments or change both. MoneyHelper notes that an early repayment charge may apply in some cases, particularly when more than £8,000 is repaid in a year, so check the agreement rather than assuming every overpayment is free.
Do not cancel the normal Direct Debit until the lender confirms the loan has been settled and no final amount remains.
Should you use savings to pay off debt?
Using savings can make sense when the debt costs more than the savings earn, but retain access to enough money for foreseeable emergencies and check repayment penalties first. Emptying every account can be a false economy if the next repair or essential bill has to go onto expensive credit.
Consider four questions:
- Is any of the money reserved for rent, tax, energy, insurance or another known bill?
- Can the savings be accessed without a penalty or loss of an important benefit?
- What interest and time would the repayment genuinely save?
- Would you still have an appropriate emergency buffer for your circumstances?
MoneyHelper’s current guidance generally places expensive debt before additional saving or investing, while also emphasising access to emergency funds. The appropriate buffer depends on income stability, dependants, health, housing and access to support; there is no universal amount.
Can debt consolidation help you pay off debt?
Debt consolidation can help only when the new arrangement clears the intended debts, lowers the total cost after fees and remains affordable for the full term. A smaller monthly payment alone does not prove that it is cheaper because a longer term can increase the total repaid.
Before consolidating, compare:
- the settlement amount for every existing debt;
- the new interest rate and whether it can change;
- arrangement, transfer and early-repayment charges;
- the total amount repayable, not only the monthly payment;
- the new repayment period;
- whether old credit limits will remain available; and
- what asset, if any, secures the new borrowing.
Securing previously unsecured debts against a home increases the consequences of missed payments and could put the property at risk. MoneyHelper’s debt-consolidation guide recommends checking total cost, interest, fees and affordability. If the real problem is that repayments exceed available income, free debt advice is usually more appropriate than another loan.
How can you pay off debt faster without borrowing more?
Pay debt faster by reducing avoidable interest, making consistent overpayments, directing genuine windfalls to the target and preventing new balances. Small repeatable changes are more reliable than an extreme plan that collapses after one month.
Practical options include:
- move the target payment to just after dependable income arrives;
- round an affordable payment up by a fixed amount;
- cancel unused subscriptions and direct the exact saving to the target;
- apply some or all of a genuine windfall after protecting upcoming essentials;
- sell suitable possessions you no longer need;
- claim benefits or entitlements for which you qualify;
- review insurance, utilities and contracts at renewal; and
- ask whether an existing high-rate provider offers a lower rate without extending the debt or adding fees.
Avoid schemes promising guaranteed rapid results, companies demanding upfront fees, and any request to move money through your account. Never take high-cost credit to create the appearance of clearing another balance.
What should you do if you miss a payment?
Contact the lender promptly, explain what happened and state what your current budget allows. Ask what support is available and what any arrangement would do to interest, charges, the term, balance and credit-file reporting.
Do not overpay another debt while the missed payment is unresolved. If several accounts are affected, use a free debt adviser to review the whole position instead of making isolated promises. Citizens Advice explains that money left after essential bills and priority debts is your available income; where reduced offers are appropriate, non-priority creditors may be offered a fair pro-rata share.
In England and Wales, an eligible person with problem debt may receive temporary protection through the formal Breathing Space scheme while obtaining advice and making a plan. Standard Breathing Space can last up to 60 days, but it does not write off debt and repayments remain due. A debt adviser must apply if it is appropriate; see the current GOV.UK Breathing Space guidance. Scotland and Northern Ireland have different systems.
Does paying off debt improve your credit score?
Paying on time and reducing balances can support a healthier credit history, but clearing a debt does not guarantee an immediate score increase or future approval. Lenders use their own criteria, and credit-reference agencies calculate different scores.
Missed payments, arrears and defaults can remain on a credit report even after the balance is paid. A settled account should eventually show a zero balance or the appropriate settlement status, but accurate negative history is not normally removed simply because the debt has been cleared. Check all UK credit reports and dispute factual errors with the organisation that supplied the information.
Do not make unaffordable payments solely to protect a score. Housing, energy, food, health and a sustainable plan come first. Our guide to things that can hurt your credit explains payment history, utilisation, applications and report errors in more detail.
How often should you review a debt repayment plan?
Review the plan monthly at first and immediately after a significant change in income or essential spending. Also review it when a promotional rate ends, a creditor changes a rate, an annual bill becomes due or one balance is cleared.
Record the balance at the same point each month so that the comparison is meaningful. If progress is slower than expected, check interest and fees before assuming the payment failed. If the budget no longer balances, pause voluntary overpayments and reassess rather than using new credit to maintain the original schedule.
Frequently asked questions
How do I pay off debt when I have no money?
If no money remains after essential costs and priority commitments, an overpayment plan is not possible. Contact creditors, check benefits and entitlements, and obtain free debt advice. Do not promise token payments or use another loan until an adviser has reviewed the complete position.
How do I pay off £10,000 of debt?
List the debts, rates and minimums, calculate the affordable monthly surplus, choose an avalanche or snowball order, and request settlement figures where relevant. A £10,000 total does not determine the right payment or timescale; interest, debt type, income and household needs do.
What is the fastest way to pay off debt?
For someone who can meet essentials and all minimum payments, the fastest way is normally to stop adding new balances and consistently overpay the highest-interest eligible debt. Check early-repayment terms and keep enough money for foreseeable essential costs. No responsible plan can guarantee a debt-free date without the balances, rates and affordable payment.
Is £20,000 of debt a lot?
£20,000 is a substantial balance, but whether it is manageable depends on the debt types, interest rates, income, assets, household costs and required payments. Do not judge the position by the total alone. If minimums or priority bills are unaffordable, obtain free debt advice rather than trying to clear £20,000 rapidly.
How long will it take to pay off debt?
The repayment time depends on the opening balance, interest and fees, required payments, overpayments and any new spending. A simple balance divided by monthly payment is not reliable when interest is being added. Use each provider’s statement or repayment calculator and review the estimate whenever a rate or payment changes.
Can I pay off debt and still save money?
Yes, when the budget supports both. Keep an appropriate accessible buffer for near-term essentials, then compare the interest charged on debt with the return on savings. Expensive debt will often take priority over additional saving, but emptying all savings can force new borrowing after an emergency.
Is it better to pay off one debt or several at once?
Maintain every affordable contractual minimum, then concentrate voluntary overpayments on one target. Spreading the same extra amount across several debts normally delays the first completion and can leave high-interest balances outstanding longer.
Should I pay the smallest debt first?
Paying the smallest debt first can be sensible when an early win will help you stay committed or remove a troublesome small account. Paying the highest-interest debt first will usually save more interest. Priority debts and essential costs come before either method.
Should I pay off a loan or a credit card first?
After priority costs and minimums, compare their effective interest rates, promotional-rate end dates, fees and overpayment terms. The higher-cost debt is usually the avalanche target, but obtain a personal-loan settlement statement before clearing it early.
Can I ask a lender to freeze interest?
You can ask, particularly when a payment is unaffordable, but a freeze is not automatic. Explain your circumstances, provide a realistic budget and ask the lender to confirm what it can do. Free debt advice can help when several creditors are involved.
Is a Debt Management Plan the same as debt consolidation?
No. Debt consolidation uses new borrowing to repay existing debts. A Debt Management Plan normally distributes one regular payment among eligible non-priority creditors and does not itself replace those debts with a new loan. Obtain free advice before choosing either route.
Can Breathing Space clear my debts?
No. Breathing Space is temporary legal protection for eligible people in England and Wales; it does not write off balances. A debt adviser must assess whether it is suitable and help with the longer-term plan.
Sources and review information
This guide was newly researched and written for Money Trumpet and last reviewed on 13 September 2026. Principal sources were MoneyHelper’s guidance on prioritising debts, paying debt or saving first, personal-loan early repayment, debt consolidation, contacting creditors and free debt advice; Citizens Advice guidance on making a debt repayment plan; the FCA’s current rules on forbearance and due consideration; and GOV.UK guidance on Breathing Space.
Money Trumpet is a credit broker, not a lender. This article provides general information, not personalised debt, financial, legal or insolvency advice. Debt priorities, enforcement procedures and formal solutions vary across England and Wales, Scotland and Northern Ireland. Obtain free independent advice about your circumstances before changing unaffordable payments or responding to legal action.