MoneyMagpie Editor and financial expert Vicky Parry warns that people need to act now to become debt-free in 2026
If your credit card is feeling the pinch as we reach the end of the year and your Christmas plans have cost more than you planned, you’re not alone.
Starting a new year in debt is hard but inevitable for many of us. But there are things you can do to save money and get yourself on track for a debt-free future.
The following tips should not be seen as financial advice and is more to suggest possible options you may want to consider. Always seek free debt advice from organisations such as National Debtline if you are really struggling.
Transfer your credit card balance
Credit cards help bail us out of short-term financial stress but living on your credit is stressful and doesn’t set you up for positive financial habits in the future. It can be easy to forget when promotional periods end, which see interest rates rocket and your monthly bill spiral.
Paying off only the minimum each month doesn’t reduce your debt much, either. That’s because your payments go towards the interest first, rather than the debt itself. Balance transfer cards help give you some breathing space when it comes to paying down the debt rather than getting stuck in the interest payment spiral.
Look for a balance transfer credit card deal with ideally a 0% balance transfer fee and a long 0% period such as a year or more. Santander has a 0% transfer fee with 12 months interest-free period, while Natwest currently has an offer for up to 34 months with a relatively low 3.15% transfer fee. This gives you a whole year to pay your debt in more manageable monthly instalments before interest is charged, so you can clear the debt instead of the interest.
Consider a consolidation loan
If you have multiple debts such as credit cards, loans, and an overdraft, or debts with utilities companies and other providers, it can be overwhelming to manage. Working out your monthly minimums for each line of credit and which ones have the highest interest rate (which should usually be the debts paid off first, if you can) is a headache.
A consolidation loan is a way to manage this. It’s a lump sum payment to clear your individual debts, which you then repay in one single payment each month. Interest rates can be higher on consolidation loans with debt management companies but they will remove the headache of contacting each individual company you hold a debt with.
Pay off high interest debt first
In most cases, your highest interest debt should receive the lion’s share of your repayments each month. Always repay the minimum on every debt, of course, but if you have spare cash to pay down your debts, the highest proportion should go to the highest interest rate debt. This is because it works out to be the most expensive debt to keep, so the faster that you pay it off, the less you pay in the overall long term.
Make a realistic budget
Making a budget is one of the tips you’ll always see with ‘get debt free’ articles, but it’s not as easy as simply stripping out everything you think is an extra cost.
Life gets in the way, and that means unexpected costs you didn’t budget for easily disrupt your plans. Budgeting also shouldn’t mean total denial and spartan living. You never know what’s around the corner, so having some small things that brighten your day is very important to maintain a healthy mental outlook while also being considerate of how to manage your spending.
For example, instead of cutting out all streaming subscriptions, choose one each month and rotate between them. Or, make sure you budget for your favourite luxury coffee in the monthly food shop. Maybe you like having takeaways or dinner out: budget for one a week instead of three, or one per month if you prefer, so you don’t feel guilty when you spend on yourself.
Rotate free trials
One way to still enjoy small luxuries while whittling away at your debt is to find ways to get free stuff. That can mean signing up to newsletters with deals and offers, looking for birthday freebies, or opting for free trials.
Rather than doing everything at once, try to rotate free trials to ensure you have a different subscription or service every week or month. This will help you stick to your savings goals and make sure you find a service or subscription that you actually enjoy and would be willing to spend money on, rather than having lots of unused services.
Find free cash opportunities
There are quite a few ways to earn small amounts of free cash throughout the year.
Current account switches can yield over £200 if you meet eligibility requirements and you find a suitable option. You could also switch more than once in a year, if you have the time and the administrative energy.
Use cashback websites like Topcashback and Quidco to make sure you always get a small amount back on your purchases. You can also get cashback for things like comparing your insurance policies each year, and free cash for referring a friend.
Online survey sites like Swagbucks can also net you a small chunk of change each year. You’re not going to make big money but if you replace your doomscrolling time with surveys and being paid to play games, it adds up over the year.
Make a habit of sweeping this into a savings account rather than letting any bonus be lost on mindless spending. Saving is just as important as paying off your debts, especially if you don’t have an emergency safety net yet. Try to evenly split the money you save and make from shifting debt, selling unwanted items, doing surveys and getting cashback between paying off debts and starting a savings net.
Spread your savings and investments
Developing better financial literacy is one of the most important things you can do for yourself. It will help you avoid debt in the future as well as build a stable foundation where your money works for you instead of the other way around.
Take investing courses, read online about different savings accounts, and learn more about diversifying your portfolio between short-term cash savings and long-term stocks investments. It will pay off – possibly literal – dividends in the future.
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