Around a massive 146,000 people will become insolvent this year in England and Wales, up by 10% on 2009. Worse still, nearly half of all people struggling with debt have not sought advice because they do not feel their problem is big enough to seek help for. There are around 1 million people in the UK are struggling with debt, with some 400,000 yet to come in from the cold and seek advice.

Young people in particular seem to be heading for debt problems, with a third of those aged between 18 and 24 who have debt problems having not asked a professional debt adviser or even their parents for help, saying instead it is “easier not to think about it”.

Exploding the myths

Common reasons for not seeking help are that people are afraid of the stigma of seeking help for their debts or are worried about what people think or about the impact it will have on their families.

If your debts are keeping you up at night, then doing nothing is the quickest way to make your situation worse. Debt counselling businesses are a well established and legitimate way of tackling debts. Typically your creditors will be contacted on your behalf and asked to freeze interest payments, arrange a repayment plan, and get some of your debts written off if you are eligible for this. This negotiation is on your behalf and should happen discreetly and quickly. Working with a reputable firm who will treat your problems sensitively, fairly and efficiently is paramount.  Below is a summary of the routes that may be suggested to help tackle the different sorts of debt problems.

What help can you expect?

Debt Relief Order

These last for 12 months, and within that time any creditor named on the order is not allowed to chase you for money. To qualify, you have to owe less than £15,000, not own your own home, and have very little in the way of surplus income or assets.

These are run by the Insolvency Service, so you do not have to go to court, and they cost £90.

Once you get through the year and the agreed payments, you will be free from those debts, subject to the terms of the order.

Debt management plan

Debt counsellors can agree a set monthly payment with all your creditors that will clear your debts within an agreed period of time. The benefit is that you pay one amount to your debt counsellor, and that is then split between your creditors – no more juggling amounts to different lenders.

Some creditors may agree to write off some of your debt, some may freeze interest, and the best bit is that all the difficult conversations are taken on by a professional on your behalf.

Individual Voluntary Arrangement
This is where things start to get more formal. An IVA is a binding agreement on all parties that you will be clear of your debts within five years, providing you keep your payments going. Up to 75% of your creditors for your unsecured debt have to agree to this, so it is not a foregone conclusion.

There is no minimum debt you have to owe to have an IVA, but generally less than £15,000 would be dealt with where possible through a debt management plan.

Bankruptcy

If you have no alternative, then bankruptcy may be your last resort to protect yourself from creditors. It sounds scary, but may not be as bad as you think. Don’t think that means it is an easy option though, it isn’t.

You can be made bankrupt by a creditor for owing as little as £750, and it will have a severe impact on your ability to get any kind of credit for up to six years, even though the bankruptcy itself can be discharged within one.

You can only have a bare minimum amount of money to live on, you will be forced to sell assets to pay your creditors, and your home is definitely at risk if you take the bankruptcy option. Speak to a debt counsellor before you make any rash decisions.

The total UK personal debt at the end of April was £1,460 billion – more than the entire country produces in a year, according to figures from Credit Action.

The research, from the Consumer Credit Counselling Service, men are finding it increasingly hard to pay their debts, and a rising number are even failing to meet basic living costs.

Even though male debt levels are dropping, down from an average of £30,000 in 2007 to £26,957 last year, the number seeking help has risen by more than half over the same period. Nearly half of them are having problems because their income has fallen due to unemployment or redundancy.

Funding cuts could cause problems

However, it may soon be harder to get debt advice from the charities, as a report from Citizens Advice shows it has fielded an additional 2.4m debt enquiries in the past year. Things may be about to take a turn for the worse too, as Government spending cuts to reduce the budget deficit – the country’s debt – could ironically knock off some of the funding on the head for bodies such as Citizens Advice.

This means that private companies who offer debt advice will bear more of the burden for helping those needing debt advice, debt management plans, individual voluntary arrangements (IVAs) or even bankruptcy.

Government funding is likely to be focused on those in the greatest need – low earners and the most vulnerable – which could leave middle-income earners, who may face some of the biggest problems, searching for debt advice elsewhere.

Take action sooner rather than later

Debts are a lot like weeds – leave them to their own devices, and they soon get out of control. But keep a regular check on them, and keep on top of them, and they are never going to be a problem.

So you need to take action sooner rather than later if you have a problem paying your debts, as it is not going to get any better without you addressing it head on. Speak to a debt adviser to get yourself on the right track to paying off your debts. It is not going to be easy, but it should help to free up some income for you to stop that downward debt spiral.

Some 2.5m credit card holders are using their credit cards to withdraw cash and in the process are being stung for around £90m a year in interest.

It’s a little known fact that withdrawing cash on your credit card often costs you well over 20 per cent in interest! Worse still, even if you are paying off your borrowing each month, then your cash borrowing will not be paid off until any other debts – balance transfers or purchases – are cleared from the card.

In addition  5 million Brits are using their credit cards to pay household bills. This is just storing up a whole heap of financial trouble because it means borrowers end up paying  a high APR for longer.

Three top tips to STOP THE CREDIT CARD ROT.

1. Do a balance transfer to a 0% credit card

Move your balance to a 0% card. Natwest is offering 0% on balance transfers for 15 months, with a transfer fee of 2.9% of the amount transferred. Virgin Money’s 0% deal lasts for 14 months, and has a slightly higher transfer fee of 2.98%.

Having a £5,000 cash withdrawal balance for a year at 20 per cent would cost you £1,000 in interest. If you have additional borrowing, then that is the least you could save.

2. Get a loan

If you cannot use a balance transfer card to get a 0% rate, or even if you can only move part of the balance, then get a loan. Sainsbury’s Finance has a 7.8% rate for borrowers taking loans of between £7,500 to £14,999 for up to five years. But you have to be a Nectar card holder to get this rate. The scheme is free to join, and you can get money off items, such as shopping at Sainsbury’s, so there may be an upside.

Tesco Bank is offering the same amount for the same period at a marginally higher 7.9%, but there are no extra hoops to go through to get this rate.

3. Consider taking debt advice

Most people don’t realise that they have a debt problem until they are up to their necks in it. If you are having to use your card on a regular basis to pay your household bills, and you are even contemplating withdrawing cash on the card, then consider getting some free help to get your debts in check.

Speak to a debt adviser to find out what you can do to get your finances back on track. There are a number of options, including a debt management plan, an individual voluntary agreement, and even bankruptcy – which is right for you will depend on your position. But that is what the debt adviser is trained to do, so find someone to help you deal with your debts sooner rather than later.

What is less widely publicised is the fact that there is a now a secret  debt amnesty happening with creditors writing off debts at a faster rate and to a greater extent than at any time in living memory. Creditors are striking deals with over indebted consumers, often writing off up to 80% of their debt because they have accepted that in the long run it will be cheaper for them to get back only a small percentage of the money they lent, versus losing the lot and creating a generation of bankruptcies.

Guy Morris, head of debt and loans at Totally Money, said: “The debt management companies are not only bound by industry guidelines to provide ‘most appropriate advice’, they have relationships with the creditor companies enabling them to negotiate to achieve the best outcome for the debtor. Creditors are generally fully in favour of debt management companies because they recognise that they are experts in their field, can negotiate and resolve issues quickly and efficiently and indeed are a cheap means of credit control. When faced with losing all the money they’ve lent versus coming to an agreement that sees them recover some of their money, they recognise that this is cost effective. A Debt Management Company will stand and fall on its relationships with creditors, so it’s vital that they behave properly towards both the creditor and the debtor. This tension tends to ensure a ‘good’ outcome for all parties.”

We think that the clock is ticking on this amnesty as the economy begins to recover and with the likelihood that any new government will want to draw a line under what has gone before and get the taxpayer a return back on the part nationalised banks.

Getting yourself out of debt is not ever easy and we’re not pretending that it is. However there are some powerful steps you can take to reduce the stress, get creditors off your back and buy yourself time to get your life back on track.

Here is the Totally Money lowdown on how you can get yourself out of debt now:

1. Don’t ignore the problem

Debts need to be dealt with urgently – leave them to their own devices by sticking your head in the sand, and you will compound the problem and make it even harder to sort out.

Yes, it can be embarrassing to talk about, and yes it can be hard work to turn things around. But that is not a good reason to put off the conversation.

Get in touch with a debt adviser now and find out what your options are – there are more ways out of the position you are in now than you think.

2. Don’t try to deal with the debt in isolation – look at everything financial

One of the biggest mistakes people make is trying to ‘just deal with the debt’. It doesn’t work like that.

To sort your debt out, you need to make changes to other areas of your financial affairs. Spend less, work to a budget, make sure you are getting the best deals, use any money you are freeing up to throw at the debt to make it go away. You have to look at everything in the round to solve the problem.

3. Get some help

You need it more than you think, so ask for help – speak to a debt adviser now. If you are being chased for your debts by collection agencies, then you can stop their bullying tactics for 30 days once you have asked for help. Enough time to catch your breath and get some real moves in place to clear your debt problems.

4. The help you can expect

Debt counsellors can speak to your creditors to freeze interest payments, arrange a repayment plan, and even get some of your debts written off in some cases. There are also formal plans they can put in place to get you off the hook:

Debt Relief Order

These last for 12 months, and within that time any creditor named on the order is not allowed to chase you for money. To qualify, you have to owe less than £15,000, not own your own home, and have very little in the way of surplus income or assets.

These are run by the Insolvency Service, so you do not have to go to court, and they cost £90.

Once you get through the year and the agreed payments, you will be free from those debts.

Debt management plan

Debt counsellors can agree a set monthly payment with all your creditors that will clear your debts within an agreed period of time. The benefit is that you pay one amount to your debt counsellor, and that is then split between your creditors – no more juggling amounts to different lenders.

Some creditors may agree to write off some of your debt, some may freeze interest, and the best bit is that all the difficult conversations are taken on by a professional on your behalf.

Individual Voluntary Arrangement
This is where things start to get more formal. An IVA is a binding agreement on all parties that you will be clear of your debts within five years, providing you keep your payments going. Up to 75% of your creditors for your unsecured debt have to agree to this, so it is not a foregone conclusion.

There is no minimum debt you have to owe to have an IVA, but generally less than £15,000 would be dealt with where possible through a debt management plan.

Bankruptcy

Sounds scary, but may not be as bad as you think. Don’t think that means it is an easy option though, it isn’t.

You can be made bankrupt by a creditor for as little as £750, and it will have a severe impact on your ability to get any kind of credit for up to six years, even though the bankruptcy itself can be discharged within one.

You can only have a bear minimum amount of money to live on, you will be forced to sell assets to pay your creditors, and your home is definitely at risk if you take the bankruptcy option. Speak to a debt counsellor before you make any rash decisions.

5. Keep making the payments – then sort your finances out

Don’t mess around with this – you need to keep your repayments up on any of these plans for them to play out properly. If you don’t keep your end of the bargain, you could find yourself in a deeper hole.

But once you have made it through the other side, be sensible. Look at how you got yourself into debt in the first place, and make any changes you need to so you make sure you don’t get into debt again.

* Source: Post Office

One in 10 people are finding it difficult to manage their debt according to official figures from the Committee of Public Accounts. Even a project from the Department for Business, Innovation and Skills designed to offer face to face advice on debt problems cannot keep up with demand.

So if you are having debt problems, you are one of around 6m people in the UK struggling to keep up with repayments. The important thing is to take action as soon as you can to try and improve your position, and the best way to do that is to speak to an adviser as soon as you can.

If you have more than £15,000 in debt and you are struggling to repay, you may need to consider using an Individual Voluntary Arrangement (IVA) to sort your problems out, and get your creditors off your back.

Pros: It is a formal, legally binding agreement with your creditors to help you repay debts. You will often be able to pay back less than you actually owe. It is handled by an insolvency practitioner, who will negotiate with your creditors. It is not the same as bankruptcy. Lenders, if they have not already done so, will be unlikely to push for County Court Judgements against you once it is in place, as it is a legal agreement, so there is little point. This can save your credit rating, as CCJs will appear for six years. An IVA, once cleared, will put your credit rating back to ‘normal’, so there is no lasting effect.

Cons: You have to keep up with agreed repayments otherwise you could face bankruptcy. Some lenders may not agree to the IVA, and at least 75% of them have to. It will take up to five years to clear debts through an IVA.

Any exclusions: You have to have debts of more than £15,000 to qualify.

Alternatives: You can try to speak to your creditors yourself, but you may get less sympathy or help than they would extend to a professional helping you. You could declare yourself bankrupt for debts of as little as £750, but this has severe ramifications for your financial future.

Further reference: Speak to a debt adviser Related: Latest debt news

However now more than ever there is a favourable climate for the indebted to come in from the cold and negotiate with their creditors, with government backed schemes that can help write off up to 70% of your debt.

If you have more than £15,000 in debt and you are struggling to repay, you may need to consider using an Individual Voluntary Arrangement (IVA) to sort your problems out, and get your creditors off your back.

Pros: It is a formal, legally binding agreement with your creditors to help you repay debts. You will often be able to pay back less than you actually owe. It is handled by an insolvency practitioner, who will negotiate with your creditors. It is not the same as bankruptcy. Lenders, if they have not already done so, will be unlikely to push for County Court Judgements against you once it is in place, as it is a legal agreement, so there is little point. This can save your credit rating, as CCJs will appear for six years. An IVA, once cleared, will put your credit rating back to ‘normal’, so there is no lasting effect.

Cons: You have to keep up with agreed repayments otherwise you could face bankruptcy. Some lenders may not agree to the IVA, and at least 75% of them have to. It will take up to five years to clear debts through an IVA.

Any exclusions: You have to have debts of more than £15,000 to qualify.

Alternatives: You can try to speak to your creditors yourself, but you may get less sympathy or help than they would extend to a professional helping you. You could declare yourself bankrupt for debts of as little as £750, but this has severe ramifications for your financial future.

Further reference: Speak to a debt adviser Related: Latest debt news

If you have more than £15,000 in debt and you are struggling to repay, you may need to consider using an Individual Voluntary Arrangement (IVA) to sort your problems out, and get your creditors off your back.

Pros: It is a formal, legally binding agreement with your creditors to help you repay debts. You will often be able to pay back less than you actually owe. It is handled by an insolvency practitioner, who will negotiate with your creditors. It is not the same as bankruptcy. Lenders, if they have not already done so, will be unlikely to push for County Court Judgements against you once it is in place, as it is a legal agreement, so there is little point. This can save your credit rating, as CCJs will appear for six years. An IVA, once cleared, will put your credit rating back to ‘normal’, so there is no lasting effect.

Cons: You have to keep up with agreed repayments otherwise you could face bankruptcy. Some lenders may not agree to the IVA, and at least 75% of them have to. It will take up to five years to clear debts through an IVA.

Any exclusions: You have to have debts of more than £15,000 to qualify.

Alternatives: You can try to speak to your creditors yourself, but you may get less sympathy or help than they would extend to a professional helping you. You could declare yourself bankrupt for debts of as little as £750, but this has severe ramifications for your financial future.

Further reference: Speak to a debt adviser Related: Latest debt news

The gulf in average interest rates between loans of £3,000 and £15,000 is now a massive 5.8%, so you have to be canny about your options. Here are our suggestions if you want to borrow £3,000 over three years.

Zopa A* 10% Interest Rate

Pros: A relatively low rate on a personal loan for this period. Monthly repayments would be £96.20 (Moneyfacts data).

Cons: Has a fee of £118.50. Payments must be made by direct debit.

Any exclusions? You must be at least 26 years old. Only available to new customers.

Alternatives: If it is for a purchase, consider a credit card with a low rate of interest. Halifax Easy Rate Mastercard 6.9% APR on purchases On £3,000 over three years, the interest would be £484.86 with the Zopa loan, but just £329.79 with the Halifax card – a saving of £155.70 over the term.

Further reference: Speak to a loan adviser Related: Credit card comparisons

Pros: It is handled by a debt specialist on your behalf, so you do not have to have the difficult conversations with creditors you have been putting off. Your interest payments can be frozen, and the debt plan manager may even be able to get the creditors to reduce what you owe. There is less ‘formality’ about this than an IVA or bankruptcy, so your credit rating will not be as badly affected. You will make one payment to your creditors via your plan manager, so it is easier to keep on top of.

Cons: You have to keep up with agreed repayments otherwise you could face bankruptcy. Some lenders may not agree to write off debts or freeze interest. You could be paying the debts off for a longer time than you would under an IVA or bankruptcy.

Any exclusions: You have to have debts of less than £15,000 to qualify.

Alternatives: You can try to speak to your creditors yourself, but you may get less sympathy or help than they would extend to a professional helping you. You could declare yourself bankrupt for debts of as little as £750, but this has severe ramifications for your financial future.

Further reference: Speak to a debt adviser Related: Latest debt news

Debt relief orders – introduced last April – accounted for just 11,831 of the 162,613 total insolvencies for 2009. But the number of people using them from the second quarter of last year to the end of the year grew a massive two and a half times.

Debt relief orders have got lenders in a spin because anyone granted one will have their debt discharged after a year. The creditors are unhappy because they think they are too easy to get.

They are losing money because the debts are wiped out so quickly – bad news for them, but great news for anyone struggling under the burden. The debt relief order costs just £90, and will help you deal with debts of less than £15,000.

To qualify for a debt relief order, you cannot own your home, must have less than £300 in assets and a disposable income of no more than £50 a month. While this will not help everyone, Citizens Advice reckons around 50,000 people – about a third of the clients it advises – will be eligible.

But even if you are not one of these people, there is plenty of debt help available:

Debt Management Plan

The simplest way to deal with your debts is with a debt management plan. You get an expert to help you formulate the plan, and they will also help to liaise with your creditors. As they know what they are doing, they are likely to get a better result for you than if you did this yourself.

Your interest will be frozen, stopping your debts from growing any more, you can reduce the total amount you owe – as many creditors will write off a portion of your debt – and you pay a set amount each month that you can afford, agreed with the debt management advisor.

Failing to keep up with this could result in your creditors taking action against you though, and because this is an ‘agreement’ rather than legally binding, they could change the terms any time.

Individual Voluntary Arrangement (IVA)

An IVA is a legally binding agreement, and you pay a full and final settlement to your creditors, and the debt is cleared within five years. You have to owe more than £15,000 before you can consider this as an option, but once you have 75 per cent of your creditors voting in favour of this option, you know you are on the way to being debt free.

You have to disclose the value of all your assets, and you would pay an agreed amount per month for a set period, usually five years. The IVA is run by an insolvency practitioner, so you must get advice before signing up.

Bankruptcy

This is the most extreme form of debt protection, yet can be started – by you or a creditor – if you owe as little as £750.

You have to petition the County Court or High Court for bankruptcy, and everything you own will be taken into account for the bankruptcy order. The Official Receiver handles your case, and he or she will decide how your assets should be used to pay off your debts.

A bankruptcy order costs £510 to get – so it is not cheap – and the rules are much more stringent. You cannot get credit, and you can only have a minimum amount of disposable income.

Many bankruptcies are now discharged within a year, so it could be seen as a short –term blip. But don’t be fooled, it will have a big impact on your ability to get credit for years to come. It is not an easy way out.

Three in four people are asking for debt help while owing less than 20 times their net monthly income – the traditional trigger point measure for identifying debt as a problem. In addition, just a quarter of those getting advice are eligible for a repayment plan. New figures from the Consumer Credit Counselling Service (CCCS) suggest that more people are struggling to repay debts relating to small amounts of money. This all implies that people who are not addressing their debt concerns early on are falling into a spiral that becomes harder to break. Put very simply, this survey points to the fact that the sooner you seek help with problem debts the easier it is to get them sorted and get life back on track.

Follow our three top tips to get your debts sorted and see if a repayment plan is right for you.

1. Get a better rate on your loan or credit card

Credit card debt is some of the most expensive debt you can have. So borrowing on your credit card is going to be costly unless you have the best deal you can get.

Credit cards accounted for the highest proportion of debts, according to the CCCS, at just over 46 per cent, followed by personal loans at 39 per cent of enquiries.

If you are paying 16 per cent a year on a debt of £10,000, you would be paying £1,600 a year in interest.

So getting a 0 per cent deal if you can will give you at least that much to actually eat into the debt you have built up.

The Barclaycard Platinum card is currently offering 0 per cent on balance transfers for 15 months, with a fee of 2.9 per cent of the amount transferred charged. The rate then reverts to 15.9 per cent.

The Virgin Money credit card is offering 0 per cent on balance transfers for 16 months (offer ends Wednesday 17th March!), but charges 2.98 per cent of the amount being moved. At the end of the term, it reverts to 16.6 per cent.

In both cases, you would need to use the interest savings and any extra cash you can lay hands on to reduce the debt on the card to maximise the benefit of the 0 per cent rate.

2. Reduce your loan rate with a lower interest loan, a 0 per cent card, or using a 0 per cent overdraft.

If you can get a better rate for your loan than you currently have, then do it. You do not even have to transfer the whole loan to the same place.

For example, let’s say you have a loan of £5,000 outstanding. If you can transfer your loan to a 0 per cent credit card deal, then that would be best, and the Barclaycard Platinum or Virgin Money card would be ideal for this.

However, if you cannot get these cards, or any other 0 per cent card, then you have other options. Check out the 0 per cent overdraft from Alliance & Leicester.

You can get an arranged overdraft up to £2,000 on this account, and you would not pay any interest for the first 12 months. After that, the most you would pay is £5 a month to use this overdraft, or £60 a year. On £2,000, that works out to an interest rate of 3 per cent – still much lower than you can get on either a personal loan, many mortgages or credit cards.

Of course, that would not clear your total loan, but it will make a dent in it. So get the lowest rate you can for the remainder.

Existing Nationwide customers can get 7.6 per cent with the building society for loans of £500 or more.

If you needed to borrow £3,000, then many loans would be closed to you as the amount you need is too small for the minimums. So be wary of getting into loans that start to become much more expensive.

For example, a search on Moneyfacts came up with a loan rate of 10 per cent with Zopa on £3,000 borrowed over three years. A debt advisor can help you decide on the right course of action.

3. Speak to a debt advisor now

Debt problems are easier to sort out the sooner you address them. You may be embarrassed about the position you are in, but it will only get worse if you do nothing. Reputable debt advisors will speak to your creditors on your behalf with a view to freezing interest on existing debts and encouraging the writing off of payments you can’t afford.

The Government’s target for inflation is 2 per cent, so having the Retail Prices Index (RPI) hit 3.7 per cent, and the Consumer Prices Index (CPI) hit 3.5 per cent, is bad news for savers. This is higher than the rate you can get on most savings accounts in the UK, so your savings are now growing at a slower rate than prices are rising – falling in real terms.

So what can you do to get yourself back in the black? You need to get a rate that beats inflation. Here are our tips to do just that:

1. Avoid the tax

Yes, there are still some accounts out there paying a better rate than inflation, but you need to look for it – and you need to take into account any tax you have to pay. So the best place to start is with individual savings accounts (Isas). These are tax free, so the rate on offer is what you end up with in your pocket.

The Halifax Fixed Rate Isa is paying 4.25 per cent on £500 or more providing you can keep your money tied up for four years.

Anyone over 50 can put up to £5,100 into an Isa this year, so they can benefit even more. The rest of us can put £3,600 into an Isa this year, but get the extra allowance after April 6.

1. Beat the inflation rate after tax

This is tough, but it can be done. If you are a basic rate taxpayer, you need to get 4.63 per cent on your savings before tax to keep pace with inflation, according to data from Defaqto. You can beat that, with the 4.75 per cent on the Nationwide e-bond, providing you deposit at least £1 and can keep that money tied up for five years. If you have £50,000 to deposit, you can get that rate up to 5 per cent.

Looking outside the traditional savings arena can give you even more. There are two current accounts which will beat inflation for you – the Alliance & Leicester Premier Direct Account and the Santander’s Preferred In-Credit Rate Account. Both pay 6 per cent AER, which is fixed for a year.

You must pay at least £500 a month into the former, and £1,000 a month into the latter to comply with the terms. You will only get the 6 per cent on a maximum of £2,500 in the account, so do not leave any more than that in there. Once you have deposited the required amount for the month, make sure you withdraw it.

Since the rate is only fixed for a year, you need to rethink your strategy after it ends by checking what deals are available.

Unfortunately, if you are a higher rate taxpayer, you can only beat inflation at the CPI rate of 3.5 per cent – you would need 5.83 per cent as a minimum to beat this inflation rate, which is possible with both Alliance & Leicester and Santander, but at the RPI rate, you would need 6.17 per cent, according to stats from Defaqto.

The only place you can get that is on a regular savings account linked to HSBC’s new Advance account, which will pay you 8 per cent. But you have to pay for this account, so you would struggle to get the value from it.

1. Be happy – your debt is worth less than it was, but reduce the cost of it.

Rising inflation is the friend of those in debt. If you have borrowed money then rising inflation means that the value of that money is less than it was when you borrowed it.

Does this have an impact in real terms? Yes it can. Apart from the above, inflation is the measure by which wages are increased – so the higher the level of inflation, the higher any pay rise will be, and the more you will have available to pay off your debt. In the current circumstances, a pay rise may not be on the cards for some people, but the premise still holds.

If you would rather not wait, then move your debt to a lower rate than you are currently paying if you can. Get a 0 per cent credit card, (Typical APR variable) or a lower rate loan.

1. Interest free balance transfer credit cards
This comes in as number one because when handled correctly, it offers one of the most affordable debt-consolidation options available. Transferring your existing credit card debts onto a card that offers interest-free balance transfers for a set period allows you to reduce the balance without paying interest at the same time.
Watch for – Expensive transfer fees. Do your sums to ensure that you will be actually saving money by transferring your balance.
Best for – Relatively low amounts of credit card debt of around £5000 or less.
Best Buy – MBNA Platinum Plus Card – it offers a lengthy interest free period and a low 3% handling fee. Good acceptance rate. Use an impartial credit card comparison service to find the best option for you.

2. Use your savings
Racking up interest on a credit card debt makes little sense if you have money sitting in a savings account. Even if it is a high-interest savings account, the advantages are out-weighed by credit card debt interest charges, so use the funds to clear your debts then begin saving again.
Watch for – Withdrawal penalties. If your money is tied into schemes that are expensive to exit from and the credit card debt is relatively low, you might be better off considering a balance transfer credit card as above.
Best for – Smaller debts. The time and effort required for balance transfer credit cards and consolidation loans make smaller debts the perfect reason to dip into your savings; after all, that’s what it’s there for. Consider this a rainy day.

3. Consolidation loans
Consolidation loans are a dramatic way to deal with Christmas card debt, and should be considered for large amounts of debt of around £6000 and over. Rolling your debts into one large loan can simplify your finances, and you may pay less interest in the long-run, particularly if you consider a secured loan.
Watch for – The elusive low APR. The advertised APR is often only offered to borrowers with near-perfect credit ratings. Avoid the rejection spiral by applying to lenders that have less stringent acceptance criteria, and give yourself a greater chance of being accepted.
Best for – Large debts. If this Christmas has pushed you out of your credit card balance comfort zone and you are looking for a long-term solution, this may be the option for you. Suits bad credit candidates.
Best buy – This will depend on your financial circumstances and the loan size you are looking for, but both Moneyback Bank and Alliance and Leicester personal loans are a good option, particularly for those looking to consolidate a large amount of debt with a fairly good credit rating. Bad credit applicants should consider a secured loan option in order to secure the lowest interest rates possible – First Plus have reasonable acceptance criteria and affordable interest rates for people in this situation.

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