Step 1: List what you owe
Write down each debt with its balance, interest rate and minimum repayments. For example:
| Debt | Balance | Interest rate | Minimum a month |
|---|---|---|---|
| Credit card | €6,000 | 22% | €180 |
| Car loan | €9,000 | 8% | €280 |
| Personal loan | €2,000 | 10% | €90 |
That’s €550 a month of minimums. Say you can pay €200 more, €750 a month in all.
Your own rates may be lower: many Irish credit cards charge less than 22%. Every credit card account also costs €30 a year in Government stamp duty, which is one more reason to clear cards you don’t need.
Step 2: Pick a method
Both methods pay the minimum on everything and put the extra on one debt. When it’s paid off, its payment rolls onto the next.
- Avalanche: the highest interest rate first (here, the credit card). It costs the least.
- Snowball: the smallest balance first (here, the personal loan). You clear a debt sooner, which keeps many people going.
Worked out month by month, as in our debt payoff calculator.
The difference between the two methods is small here. What matters most is paying more than the minimums, and keeping at it. Try your own debts in the debt payoff calculator.
Step 3: Pay less interest
- A credit union loan is often cheaper than a credit card or overdraft, and can clear several debts at once. It only helps if you don’t run the cards up again.
- Talk to your lender early: under the Central Bank’s rules, lenders must work with you if you’re in arrears or about to be.
- Cut the overdraft: an overdraft is meant for short gaps, and the interest adds up when you’re always in it.
- Avoid moneylenders. Licensed moneylenders charge far more than banks or credit unions, so borrowing from one to pay another debt makes things worse.
Step 4: Find more to pay
- Make a budget and give the extra a fixed amount each month. The budget calculator shows where your money goes.
- Put windfalls on the debt: tax refunds, bonuses and gifts. Check Revenue’s myAccount for credits you haven’t claimed, such as the rent tax credit: you can claim back four years.
- Stop adding to it: take the card out of your phone’s wallet, and pay by debit card while you clear it.
Step 5: Stay out of debt
Once a debt is gone, keep paying the same amount into savings. An emergency fund means the next surprise bill doesn’t go back on a card. If you can’t keep up with your payments, get free help early: see help with debt.