Debt is more common than you might think. The average UK household owed £68,318 in July 2026, including £2,832 on credit cards, according to The Money Charity. Here’s how to work out which debts are costing you most, the smartest way to pay them down, and where to get free help.
What counts as expensive debt?
Expensive debt is when you pay back more than what you initially borrowed. You can gauge whether debt is expensive by looking at the interest rate – if you’re paying 50% or more, chances are, you're looking at the expensive stuff.
There are different tiers of debt. Mortgage debt is usually the cheapest. You pay a mortgage back over a long time too, so it doesn’t always feel that expensive.
The next tier is usually personal loans, which increases for credit cards. At the top of the heap are overdrafts, which can top 50%!
What's the best way to pay off debt?
- Pay off the minimum each month. Let's say you’ve got £1200 of debt, for which you’re charged interest of 10%. So you’re paying £120 a year or £10 a month on top. That means you need to be paying off more than £120 a year or £10 a month to actually reduce the debt at all - otherwise you're just breaking even or adding to your total amount!
- Prioritise which debt you want to start tackling. Get all your paperwork together so you can see all your outstanding debts and look at which ones come with the highest interest rate.
- Consider reaching out to a debt charity. Be wary of anyone who charges for debt help – the best advice is free, and the sooner you ask, the better.
Why should I bother paying off my debts?
This is an important point. Spread over a long enough period of time, debt can look pretty cheap and may not be making a big dent in your monthly outgoings. However, it’s worth considering that debt matters to your credit rating, affecting your ability to get a mortgage or loans. If it’s really bad, utility providers or phone companies may not even deal with you! Suddenly, life becomes a lot more complicated.
Join Boring Money for free to read the full article, including:
- The importance of paying off debts.
- Links to charities that offer support if you are struggling with debt.
- A 3-point plan to help you get back on your feet.
