Take steps now to manage your festive debt

If, for example, you have taken out a payday loan, you should make every effort to clear the debt as soon as possible, with the same rule applying to credit card debt.

Georgie Frost, consumer advocate at GoCompare Money, said: “If your debts are spread across more than one card, repay the most expensive card first.”

You should also try to pay off more than the minimum payment each month, with Ms Frost noting that “card issuers add interest to any outstanding balance”, meaning that “the longer you take to repay the debt, the more money you will owe”.

If you have debts but also have savings, it is worth considering using your funds to clear what you owe.

Liz Alley of financial management firm Brewin Dolphin said: “You’re likely to be paying more in interest on your debt than you are earning on your savings.

"Borrowing rates may currently be low, but the Bank of England has started to raise the base rate and so it makes sense to repay debt now while rates are still low.”

You can save hundreds of pounds in interest if you switch any credit card debts to a 0 per cent balance transfer card.

If you transferred the average credit-card debt of £2,663 from a card charging 19.9% interest to a 0% balance transfer card with a 27-month interest-free period, you would save £880 in interest if you paid off the outstanding balance at a rate of £100 a month, according to The Money Charity, a financial education and debt advice provider.

You usually have to pay a fee when you switch the debt, which is often a percentage of the amount you transfer. The fee could be as much as 2%, but the interest saved is likely to be far greater than the cost.

You must remember to pay off the debt before the 0% deal expires, otherwise you will start to rack up interest at a high rate. The best way to make sure you clear the debt in time is to set up a monthly direct debit.

The terms available on 0% deals vary and some of the longest have disappeared from the market, although the card with the longest 0% term might not always be the best option.

Andrew Hagger, a personal finance expert, said: “Don’t pick a card with the longest 0% duration unless you absolutely need it as shorter deals come with a lower balance transfer fee.

"For example, the Post Office Money card at 32 months charges a fee of 2%, yet if you opt for the M&S Bank card at 28 months the fee is just 0.99%.”

Another option would be a 0% money transfer card, which allows you to transfer a lump sum into your bank and pay it back over a set period. As with most balance transfer cards, there is a fee to pay. Tesco Bank charges 0% for up to 28 months, with a money transfer fee of 3.94%. Virgin Money offers a range of 0% terms on its money transfer cards. If you opt for the 26-month term, the fee is 4%, but it drops to 2% if you choose a 12-month deal.

A personal loan would allow you to consolidate a number of debts and lower your monthly payments. Interest rates for personal loans are on the increase, with average rates for a £7,500 loan now standing at 5%, their highest for two years, according to Moneyfacts.

However, borrowers should not be too downhearted, according to Rachel Springall of Moneyfacts, who said: “While rates are on the rise, there are still some good deals. For example, a number of lenders offer a loan rate of 2.8% on £7,500 over five years.”

Lenders generally charge lower rates of interest for bigger loans. It can therefore make financial sense to borrow a bit more if you are near a threshold, but never be tempted to borrow more than you can reasonably afford.

It can also be tempting to spread the loan over a longer term in order to make the monthly payments more manageable, but remember that the longer term also boosts the amount you will pay in total interest.

If you are struggling with debt, you can contact the Scottish arms of charities such as National Debtline and StepChange for free advice and support.