Consumers can make themselves debt free significantly quicker by increasing the size of their repayments, an online comparison site has suggested.
Moneysupermarket.com gave the example of a consumer owing £1,000 on a 16.9 per cent APR credit card, stating that with monthly payments of ten per cent, they could clear the debt in a year plus the additional £79.16 interest.
Those paying the minimum of two per cent, however, will accrue £151.74 in interest during the same period, while only reducing the balance to £920.60.
By comparison, someone repaying at a rate of five per cent will cut the balance by about £400 and generate £30 less interest.
“A small increase in monthly payment can make a big difference to the time taken to clear your debt,” moneysupermarket.com said.
Earlier this month, Smartlandlord.co.uk advised those in the buy-to-let property market to pay back as much of mortgages as they can afford to take advantage of lower interest rates.
By Chris Trimble