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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About the author
Enrique 'Kike' Faúndez is an Information Systems and Management Control Engineer from Universidad de Chile, with master’s degrees in Finance from Universidad de Chile and Industrial Engineering from Pontificia Universidad Católica de Chile. He has 15+ years of experience in regulated financial services across finance, operations, and digital product development. He founded CashControlly in Santiago, Chile, with the conviction that personal financial control should not be a privilege, but an accessible and well-designed tool.
- Master's in Finance, Universidad de Chile
- Master's in Industrial Engineering, Pontificia Universidad Católica de Chile
- Information Systems and Management Control Engineer, Universidad de Chile
- AI and ITIL certifications
- 15+ years in regulated financial services
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