With 2022 being described as the 'year of the squeeze' due to a sharp rise in the cost of living, many households could find themselves in debt within the next 12 months.
Meanwhile, personal debt in the UK has more than doubled in the last 12 months, with the average person owing £25,897 in 2021, according to a survey by price comparison website money.co.uk. It found around six in ten consumers are in debt right now - not counting mortgages.
Credit card debt was the most common type of debt people in the survey had (31.75%) followed by personal loans (15.6%) and overdrafts (14.15%). But mortgage debt could become a problem for households too if the Bank of England chooses to put the up again.
Here, Which? has set out nine tips for getting on top of credit card, overdraft and mortgage borrowing.
Debt charity StepChange has warned this may indicate increasing underlying financial stress in some households with two-thirds of new clients in November having at least one credit card debt.
Jot down the credit card and store cards you have and how much you owe on each as well as how much interest you are paying.
If you have a 0% deal with seven months left and a card charging 21.43% APR now, it's worth trying to clear the more expensive debt first.
If you are struggling to manage debt on a few different cards, it may be worth consolidating them. This means paying off all your debt with one single credit facility.
Using a credit card to do this gives you extra flexibility as you are able to choose how much you pay back each month (above the minimum amount) and could be cheaper than a personal loan.
If you're paying interest on credit card debt you can shift it using a 0% balance transfer card.
This gives you the chance to pay the debt down faster and save money, as all your payments will go towards the debt rather than the debt and interest.
Currently, the longest term is with Virgin Money and offers up to 35-months interest-free - though not everyone will be eligible for this term. There is a 2.94% transfer fee which means moving £2,000 would cost you £58.80.
The next best option is M&S Bank Transfer Plus Offer which could give you up to 31 months interest-free and comes with a fee of 1.99% so it would cost you £39.80 to move £2,000.
The longest 0%-balance transfer card without a fee is 26 months and is offered by Santander - this could be a better option if you have a lot of debt on different credit cards. However, the card attracts a £3 monthly fee which means it will cost you £36 a year.
Fix a set amount to pay each month rather than the minimum amount. This is because the minimum payment on a debt is usually charged as a percentage of your remaining debt which means it is reduced as your debt goes down.
For example, a minimum repayment of at least 2% on a debt of £500 is £10, but once your debt gets to £400 your minimum repayment falls to £8.
If you have savings it is worth using these to pay off credit card debt quicker - this is because you could be paying more in interest charges than you are making in interest on a savings account.
An overdraft is a credit facility that allows you to borrow more money than you have in your current account - however, most banks charge interest if you dip into it.
Once you've reached your overdraft limit it can be hard to pay it back, and interest will continue to be added to your debt.
Some current accounts offer cheap or free overdrafts but there may be strings attached so always read the finer details.
First Direct offers an interest-free overdraft of £250 on its standard current accounts. However, if you borrow more than £250, you'll pay 39.9% EAR.
Nationwide's FlexiDirect account offers an interest-free overdraft for a year but after this period you will be hit with a rate of 39.9% EAR.
This type of credit card allows you to shift money from your credit card to your current account - often interest-free for a set period.
The card with the longest 0% money transfer period is the MBNA Limited Long 0% Money Transfer Credit Card with 18 months - however, it will charge you 5% to transfer money. This is followed by Virgin Money which offers 16 months with the same fee.
The best card with the lowest transfer fee is Tesco Bank charging 3.99% with a 0% interest-free period of 15 months.
With these cards only borrow what you need to clear your overdraft and make the minimum payment each month.
If you're on a variable-rate mortgage, a base rate change is likely to have an effect on your repayments.
Homeowners on fixed-rate deals won't feel the effects until their fixed term ends and they're moved across to their lender's standard variable rate (SVR).
With inflation unlikely to fall anytime soon, the Bank of England could decide to increase the base rate further when it next meets in February, so if you're thinking of locking in a new mortgage deal, sooner might be better than later.
If you're on a variable rate deal such as a tracker or discount mortgage, you are more likely to be affected by base rate rise immediately, so you may wish to move to a fixed-term deal when you come to remortgage.
There are some scenarios where remortgaging can result in big savings including:
Support for mortgage interest (SMI) is a loan from the Department for Works and Pensions to help pay towards the interest of your mortgage.
To be eligible for this you need to be on certain benefits such as universal credit or pensions credit.
The government will pay the interest on up to £200,000 of your mortgage, direct to your mortgage lender however you will have to pay back this loan, usually when you sell.
If you're struggling to meet your monthly payments and can't get back on track it's important you don't ignore the problem.
In the meantime, continue paying what you can. Your lender will be keen to help and can explain your options which could include:
If you're struggling to get a handle on your debts, you might benefit from some free debt advice.