Do you have a credit card that you owe money on? Perhaps there’s more than one credit card and maybe there’s a store card or two in there as well. Well in this video I’m going to show you the quickest way to pay off your credit card and store card debt. I’m Sarah Pennells and i’m the founder of a money website for women called SavvyWoman.co.uk. I set up this website with women in mind. The idea is that there’s lots of really useful money saving tips and information and no jargon! So how do you pay off your credit and store card debt in the quickest way possible? It’s really quite simple. The first thing you have to do is to make a list of all your debts, so get a piece of paper and a pen – or you can use the notebook facility on your mobile phone – and make a list of who you owe the money to, how much you owe, the annual interest rate you’re being charged and what the minimum monthly payment is. Now you’ll find the annual interest rate information on your monthly credit and store card statements. These statements will also tell you how much the minimum monthly payment is. Now that’s the amount that the contract says you have to pay every month and if you don’t you could incur some extra charges and it can really mess with your credit rating as well. Now once you’ve got this list of your credit and store card debts, and you can add in things like personal loans as well if you want, have a look at that list and have a look at which debt is charging you the highest annual interest rate. If it’s a store card it could be something like 30% a year, if it’s a credit card it could be 18% to 20% a year for example. If it’s a bank loan it could be anything between 3% and 15%, maybe even be a little higher. Once you’ve worked out which of your debts is charging you the highest interest rate, put a 1 by it. Go through your list and put a 2 by the debt that’s charging at the second highest rate of interest, 3 that’s by the debt charging you the third highest rate of interest and so on. Now I get contacted by lots of women who are trying to pay off their credit card debts and they can often afford to pay more than the minimum monthly payments but what they tend to do is to split that money equally between all the different cards. That is not the quickest way to become debt-free. The really important thing is that you should pay the minimum monthly payments for the reasons I mentioned earlier and then whatever you have left over you should pay all to the card that’s charging you the highest rate of interest. Now hopefully you will have some extra money in your budget that means you can pay more than the minimum monthly amount. You don’t necessarily have to have a fortune but if you think you can’t afford to pay much more maybe have a look back through your bank statements or your budget and see if you can make any extra savings anywhere. If you can’t maybe you can bring in some extra income. So whatever you can afford to pay, pay all of it to the card charging the highest rate of interest and then when that one is paid off, take the money you were paying to that card, so the minimum payment plus whatever you could afford to pay, and pay all of that to the card charging the second highest rate of interest. When that one is paid off, pay all that money to the card charging the third highest rate of interest and so on until you’ve paid off all your debts. And because you are paying your debts off in the order of interest rate you’re paying of the most expensive first and the cheapest last that means it’s the quickest way to pay off your credit and store card debt. I mentioned the monthly minimum payment early on and I just want to give you an example as to why it’s such a bad idea only to pay this every month. So let’s assume that you owe a £1,000 on your credit card and that it’s a typical card charging 18.9% interest. If you just make the monthly minimum payment, you’ll be paying £25 a month. Now obviously as you pay that card off the monthly minimum payment will go down, but it will start off being £25 pounds so we’ll stick with that. If you only make that monthly minimum payment every month, guess how long it’ll take you to be debt-free. It’s going to take you around 18 years to pay off that credit card that £1,000 you owe on your card. 18 years! But if you could find some extra money, if you can find an extra £25 a month, so instead of paying £25 a month you are now paying £50 a month you can be debt-free on that card in around 3 years. So you’ll have an extra 15 years of not owing any money on that credit card. How would that feel? I hope you found this video useful, if you have please like it and also please subscribe to SavvyWoman’s YouTube channel so you can see all my videos as I upload them. Thank you for watching.