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Finance expert explains how to get out of debt and says ‘don’t wait’

Digging your way out of debt can feel like a particular struggle in January, when post-Christmas bills start landing. Firstly, it’s important to get on top of everything you owe, so go through your statements to work out the total amount that’s set to be coming out in the next month or so.

Don’t forget any additional spending over Christmas on top of the usual regular payments that may need to be factored in, such as any buy now, pay later purchases. Try to be realistic about how long it could take to pay the debts off when working out your budget.

To help clear debts more quickly, check whether you could be spending less money on servicing your debts. Some overdraft providers charge annual interest of around 40%.

Depending on how long you’re likely to be overdrawn for, there may be less costly options, so more of your money can go towards paying the debt down rather than just paying the interest. For some, it could be worth shifting debts around and looking for a new 0% balance-transfer card.

Some borrowers may find credit card conditions have become tougher, meaning it’s all the more important to shop around and compare deals. According to financial information website Moneyfacts, the average interest-free balance transfer term being offered on credit cards fell to 508 days at the start of December. This was the lowest figure it had recorded since April 2015.

You could also use “soft” searches online by using credit card eligibility checkers, before going ahead and making an application that will leave a footprint on your credit report. Everyone’s situation is different. While for some people dealing with debts in January means navigating a bump in the road, for others, debts can have much bigger repercussions.

Some people may find their debt situation is unmanageable. If this is the case, it’s vital to seek help and remember there is support available. Charities such as StepChange, Citizens Advice, Christians Against Poverty and the National Debtline, a service run by the Money Advice Trust, can provide support. It’s also important to speak to your lender as early as possible if you think you are going to struggle.

Eric Leenders, managing director of personal finance at UK Finance, which represents the banking and finance industry, said: “Christmas can be an expensive time and we know that some people will struggle with their finances come January. If you think your credit card or loan repayments are unmanageable, speak to your lender as soon as you can. Don’t wait until you have missed a payment to contact your lender, they are ready to help even if all your payments are up to date.

“The earlier you contact your lender, the more options they will have available and the sooner they will be able to help. Your lender will have a team of individuals who are experienced in dealing with borrowers facing financial difficulties. They will work with you to explore the different options available and find one that is most appropriate for your specific circumstances.”

UK Finance has information on its website about the support available from lenders.

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