UK household debt — credit cards, personal loans, car finance, and buy-now-pay-later — has grown significantly. The good news: UK regulations provide strong consumer protections, and there are clear strategies that work.
UK debt types and their costs
| Debt type | Typical APR | Priority |
|---|---|---|
| Credit card (standard) | 20-30% | Highest |
| Buy Now Pay Later (Klarna etc.) | 0% then varies | High (when interest kicks in) |
| Overdraft (arranged) | ~40% EAR | High |
| Personal loan | 5-15% | Medium |
| Car finance (PCP/HP) | 5-12% | Medium |
| Student loan | RPI-linked | Low (see student loan guide) |
| Mortgage | 4-6% | Lowest |
💳 Credit Card Payoff Calculator (GBP)
Balance transfer: the 0% trick
UK credit card companies regularly offer 0% balance transfer deals (12-30 months). Moving expensive credit card debt to a 0% card eliminates interest during the promotional period, allowing every payment to reduce the principal. Key: pay a transfer fee (typically 2-3%), pay off the balance before the promotional period ends, and don't spend on the transfer card.
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