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How To Pay Off Credit Card Debt Fast

Ian Haynes
WRITTEN BY
Ian Haynes
UPDATED
September 29, 2022
how to pay off credit card debt

We tackle the different ways you can repay your credit card debts faster, along with their pros and cons helping you achieve your goal of a debt-free life.

 

If you’re wondering how to reduce your credit card debt, my friend, you aren’t alone.

 

Short of receiving an inheritance or a windfall – there’s no quick fix for credit card debt – despite what infomercials promise. But the solution is simple: implement a combination of smart money moves.

 

Done right – they can significantly lower your debt amount and interest rates, whilst keeping you moving forwards in the direction of a debt-free life.

 

 

Why Pay Off Your Credit Card Debt Quickly?

 

Getting out of credit card debt may be daunting for many Americans, but it’s possible.

 

According to headlines, interest rates are set to break record highs, making now a good time to repay your high-cost credit card debts. Yes, the annual interest on credit cards is currently just over 16%, but it is expected to rise by half-point, overtaking the current record high of 17.87%.

 

Paying off your credit card debt faster may help you get a head start on your life goals, whether it’s about applying for new credit, reducing your debt, or saving on the cost of borrowing. And the best part is, it’s easier than you think.

 

There’s no one right way to pay off credit card debt, but a few tried and tested methods could help bring the debt balance to zero.

 

 

7 Strategies To Pay Off Credit Card Debt Faster

 

Tackling debt requires a solid repayment strategy: either paying off debt individually or consolidating all your debts into a single monthly payment.

 

Let’s look at the top 6 most popular repayment strategies for paying down your credit card debt.

 

1. Go for the Debt Snowball Method

 

debt snowball method

 

Simply put, the snowball method is a debt repayment strategy that prioritizes paying the account with the lowest debt balance.

 

Why? Because when many Americans direct their monthly salary into paying off larger credit debt payments on other accounts, they are left with less money and ultimately make minimum payments on the other accounts. All this leads to late payment fees, which further hurts your credit history, or you could even end up defaulting.

 

Here’s how to get started with the debt snowball method:

 

  1. Begin listing all your credit card debt balances in order from the lowest to highest.
  2. Now move on with setting up a budget in the opposite manner – focusing on paying down the minimum on all accounts except the one with the smallest credit card balance.

 

For this, set aside as much extra money as you can towards paying it off the smallest account each month, and ultimately a time comes when the balance is zero.

 

Once you have completely repaid the amount of credit card debt, start putting money aside to pay the next-lowest credit card debt balance. Keep doing this until all your credit card balances are paid in full.

 

Is the debt snowball method for you?

 

The debt snowball method is quite effective as it lets you see progress quickly. When you get a few quick wins under your belt, you build momentum, which helps you stay motivated towards achieving your goal of becoming debt-free.

 

Besides this, having fewer outstanding balances won’t feel so overwhelming.

 

On the contrary, the debt snowball method doesn’t take interest rates into account. This strategy won’t be helpful if your larger debts come with higher interest rates.

 

 

2. Alternatively – Try the Debt Avalanche Method

 

debt avalanche method

 

This debt repayment method focuses on first making payments towards credit accounts with higher interest rates, and making minimum payments on the rest of your accounts.

 

In simpler words, it’s the opposite of the snowball method. Here – you focus your efforts on paying off debt with the highest interest rates. Repeat this process until necessary to repay all of your credit card debts that have been fully paid.

 

Is the debt avalanche method for you?

 

The biggest advantage of this method is that you can save on interest charges. While it helps you save money and may be appealing, if your account with a higher interest rate has a higher balance, it may take a while to get the credit to zero.

 

 

3. Secure a credit card consolidation loan plan

 

Credit card debt consolidation refers to personal loans that are used to repay multiple loans at once, including your medical bills, unsecured debts, and others.

 

It’s a great strategy to lower your total interest rate on a credit card loan. Also, it helps with repaying debt faster as it makes managing debt easier by consolidating all the debt into one.

 

debt consolidation

Credit: Credello

 

Numerous banks, credit unions, and other online vendors offer credit card debt consolidation loans, but you’ll need to ‘qualify’ to receive those loans. Once approved, the lender deposits the loan amount into your bank account, which can be used to pay your debt. Some lenders also offer convenience by directly paying your creditors, saving you the hassle.

 

Why credit card consolidation loans can be helpful

 

The best part is that the interest rates on personal loans can be lower than on credit cards, especially if you have a good credit history. In short, you’ll be paying the same amount of debt but with a lower interest rate. Nifty, right?

 

But it doesn’t end here; credit card consolidation also helps simplify your finances. Instead of making multiple payments each month, all you need to do is just make a single payment to your personal account.

 

On top of that – some debt consolidation loans come with flexible repayment terms, allowing you to select a plan that fits your budget. Doesn’t that sound better?

 

Downsides of credit card consolidation loans

 

That said, qualifying for a credit card consolidation requires meeting the lender’s eligibility criteria. When your credit history already has a few dings, my friend, load consolidation may be out of your league.

 

Moreover, there’s a chance that you may not qualify for a loan that’s large enough to cover your credit account balance. That could mean that you would be able to consolidate only a share of your debt – you may end up with multiple lenders and repayment plans

 

 

4. Choose a balance transfer credit card plan

 

The balance transfer credit card strategy is commonly chosen by people looking for ways to save money.

 

In simple terms, this method involves transferring the balance from one credit card account (with a higher interest rate) into another account with a lower interest rate. Generally, the newer credit card accounts offer a 0% introductory balance transfer APR offer only when the customer opens an account with a certain sum of money.

 

In other words – the balance transfer credit card strategy motivates credit card debtors to repay their loans by providing an exciting zero-interest offer.

 

Credit: InCharge

 

However, the thing to remember here is that this offer is introductory, and you have a specific time frame before it expires.

 

If you’re thinking about this option, just make sure to do your research into the terms and conditions. You don’t want this offer to be revoked due to a late payment. Be aware that the credit card bank or union will apply the card’s regular balance transfer APR on the remaining debt balance.

 

Another thing to keep in mind is that you may be charged a transfer fee. Plus, the balance transfer will likely have a credit limit, so it’s not always possible to transfer all of your debt balance to the new account. Sometimes, your credit card amount exceeds the offer conditions.

 

 

5. Pay more than the minimum on credit cards

 

Another strategy that’s helped Americans pay off their debts on time is paying more than your minimum.

 

Credit card issuers usually have a handy, monthly minimum payment that is typically 2% to 3% of the balance. You should always take steps to ensure timely payments, but you can also choose to pay extra.

 

Look at your credit card statement and analyze whether you pay just the minimum balance on your credit card. If yes, it might take ages to repay the bill.

 

While it’s terrible for you, banks love it since they make money over the interest they charge, so the longer you take to pay off the balance, the richer they get! Therefore, make every effort to pay more than the minimum set by the bank.

 

 

6. Set up an automating repayment structure

 

Automating the debt payment is definitely an easy way to ensure all your debts are paid on time while preventing you from racking up any additional costs in late fees.

 

So, automated payments involve scheduling a recurring repayment process that routinely withdraws money from your account on the same day every month and gives it to the credit card company to pay off your debt.

 

 

7. Opt for paying more than once a month

 

Another great strategy that can help you repay your credit card debt quickly is paying your bills more often than the required period – i.e., more than once a month. Implementing this strategy could make it easier to stay on track.

 

credit utilization rate

Credit: Experian

 

On top of that, did you know that paying your credit card bill regularly lowers the balance utilization ratio? The credit card utilization ratio is simply the percentage of your total available credit currently in use. It is also one of the components employed by credit reporting agencies that calculate credit scores.

 

 

Understanding How Your Credit Card Debt Happened

 

Credit card debt is a type of revolving debt where an individual keeps borrowing every month. However, if you fail at repaying your balance due at the end of the month, the debt easily starts to accumulate. The amount left behind in your credit card account is carried monthly and charged interest, called the APR (Annual Percentage Rate).

 

Unfortunately – it can be all too easy for credit card debt to get ahead of you. Before you know it – it’s negatively impacting your personal finances and credit score.

 

Remember, once you fail to repay your credit card debt, it’s a cycle that has a ripple effect on your monthly income. Your debt balance will keep increasing, which will be charged with a higher interest; hence, a major proportion of your salary will go into repaying your credit card debts.

 

For instance, you have $1000 in credit card debt with an APR of 15%. You made a minimum payment of $25 per month, and your account has an interest of $400 – taking 56 months to bring the credit card debt balance to zero. Ouch.

 

To avoid getting trapped in this cycle, be sure to make paying off any credit card debt a priority each month.

 

Looking for budgeting apps to save?

Check out this article and learn about the best budgeting apps on the market that will help save your financial life!

 

 

Wrap Up: Paying off credit card debt is possible

 

Credit card debt can be a challenge and, at most times, feel insurmountable. But when you’re armed with the right tools, information and approach, you can start chipping away your credit card debt in no time.

 

We’ve discussed some of the most effective strategies – but be sure to select the one that works best for your situation – helping you realize your goal of a debt-free life.

 

 

 

Ian Haynes

About The Author

Ian Haynes is a digital marketing specialist and tech enthusiast. Outside of his work, he likes exploring Brooklyn with his Labrador.