· Johnny Pump · Lifestyle · 5 min read
How to Save Money on Credit Card Bills in the UK
Credit card bills can quickly add up, especially with high-interest rates, late fees, and unnecessary charges. However, with the right strategies, you can reduce your monthly payments, avoid extra costs, and even use credit cards to your advantage. In this guide, we’ll explore the best ways to save money on your credit card bills in the UK.
1. Pay More Than the Minimum Amount
Credit card providers only require you to pay a minimum amount each month, but paying just the minimum can lead to long-term debt and high interest costs.
Why Pay More?
- Reduces the total interest paid over time.
- Helps clear debt faster.
- Improves your credit score by lowering your credit utilisation ratio.
Example:
If you owe £2,000 on a credit card with 20% APR and only pay the minimum payment (£50), it could take over 15 years to pay off. By increasing your payment to £200 per month, you could clear the debt in just over a year and save thousands in interest.
2. Switch to a 0% Balance Transfer Card
A 0% balance transfer credit card allows you to move existing debt to a new card that charges no interest for a set period, helping you pay off the balance faster.
Best UK Balance Transfer Cards:
- Barclaycard Platinum 0% Balance Transfer – Up to 24 months interest-free.
- Virgin Money Balance Transfer Card – Up to 29 months interest-free.
- Santander Everyday Credit Card – 0% interest for up to 18 months.
How It Helps:
- Gives you time to pay off debt interest-free.
- Consolidates multiple credit card debts into one.
- Avoids high interest charges if used wisely.
💡 Tip: Always pay at least the minimum each month and aim to clear the balance before the 0% period ends to avoid high interest rates.
3. Set Up a Direct Debit to Avoid Late Fees
Missing credit card payments can result in late fees (typically £12 per missed payment) and damage your credit score.
How to Avoid This:
- Set up a direct debit to pay at least the minimum payment automatically.
- Enable payment reminders via text or email from your bank.
- Schedule payments for just after payday to ensure funds are available.
4. Use Cashback and Reward Credit Cards Wisely
If used correctly, cashback and reward credit cards can help you save money on everyday spending.
Best UK Cashback Credit Cards:
- American Express Platinum Cashback Card – Up to 1.25% cashback.
- Barclaycard Rewards Card – 0.25% cashback and fee-free overseas spending.
- Tesco Clubcard Credit Card – Earn Clubcard points for Tesco purchases.
How to Use Them Effectively:
- Pay the full balance each month to avoid interest charges.
- Use the card for essential purchases only.
- Redeem rewards for maximum value (e.g., Tesco Clubcard points can be worth 3x when used for travel or dining).
5. Consider a Low-Interest Credit Card
If you often carry a balance, a low-interest credit card can be cheaper than a standard credit card.
Best Low-Interest Credit Cards in the UK:
- TSB Advance Mastercard – 7.9% APR.
- Halifax Low Rate Credit Card – 10.9% APR.
- Lloyds Bank Platinum Low Rate Card – 6.4% APR.
💡 Tip: Even with a lower interest rate, always aim to pay more than the minimum to clear debt faster.
6. Avoid Cash Withdrawals on Your Credit Card
Withdrawing cash from an ATM using your credit card can be expensive, with high fees and interest charges from day one.
Why You Should Avoid It:
- Interest is charged immediately (no grace period).
- Cash withdrawal fees range from 3%-5% per transaction.
- It can harm your credit score as lenders see cash withdrawals as a sign of financial difficulty.
7. Negotiate a Lower Interest Rate
Many people don’t realise that you can ask your credit card provider to lower your interest rate—especially if you have a good payment history.
How to Negotiate:
- Call your credit card company and explain why you want a lower rate.
- Highlight your on-time payment history and good credit score.
- Compare rates with other providers and mention competitor offers.
- If denied, ask again in a few months or consider switching to a cheaper card.
8. Take Advantage of Interest-Free Purchase Cards
A 0% purchase credit card allows you to spread the cost of large purchases without paying interest for a set period.
Best 0% Purchase Cards in the UK:
- M&S Bank Shopping Plus Card – 0% on purchases for 18 months.
- Sainsbury’s Nectar Credit Card – 0% on purchases for 22 months.
- Tesco Bank Clubcard Credit Card – 0% on purchases for 20 months.
💡 Tip: Ensure you pay off the full balance before the 0% period ends to avoid high interest charges.
9. Use a Budgeting App to Track Spending
Keeping track of your spending can help you manage your credit card bills more effectively.
Best UK Budgeting Apps:
- Monzo & Starling Bank – Automatically categorise spending.
- Emma – Tracks subscriptions and spending patterns.
- Money Dashboard – Helps set saving goals and track bills.
10. Avoid Unnecessary Fees and Charges
Credit card companies charge various fees, but many of them can be avoided.
Common Fees and How to Avoid Them:
| Fee Type | Typical Cost | How to Avoid |
|---|---|---|
| Late payment fee | £12-£25 | Set up a direct debit |
| Foreign transaction fee | 2%-3% | Use a fee-free travel credit card (e.g., Barclaycard Rewards) |
| Over-limit fee | £12 | Keep track of your balance |
| Cash withdrawal fee | 3%-5% | Avoid withdrawing cash |
Conclusion
Credit cards can either help or hurt your finances depending on how you use them. By paying off balances in full, switching to 0% interest cards, avoiding unnecessary fees, and using rewards wisely, you can significantly cut down your credit card bills and even make your spending work for you.
