10 Tips To Pay Off Credit Card Debt Faster
8 MIN READ
Published April 06, 2023 | Updated May 03, 2023
Paying off your credit card debt is not impossible. With dedication and a solid plan, you can pay off your debt faster and achieve your financial goals.
Credit card balances are expensive to carry because of high-interest rates, so paying them off should be a priority. Credit card debt can be daunting, but it isn’t impossible to pay it off.
Millions of Americans are overwhelmed with credit card debt. In Q4 of 2022, credit card balances rose to $986 billion. Given the rising interest rates and inflation, these balances will continue to rise.
Since March 2022, there have been nine interest hikes. The average APR on a credit card today is now 24.10%.
There’s no better time to deal with your rising credit card debt.
Fortunately, these top tips on how to pay off credit card debt will provide you with a good roadmap on where and how to begin.
10 Effective Tips to Help You Pay Off Credit Card Debt
If you have month-to-month credit card balances, paying off your debt can be challenging. The key is to have a good plan and stick to it.
These ten tips will show you how to effectively pay off credit card debt.
1. Set a Realistic Goal
It’s important to set goals for yourself when it comes to paying off high-interest debt. It takes discipline and time to become debt-free, but having realistic goals can help you stay on track.
Set S.M.A.R.T personal finance goals - specific, measurable, attainable, relevant, and timely. Having a clear idea about what you want will make it easier to know what to do to achieve that goal.
2. Curb Your Spending
If you want to learn how to pay off credit card debt faster, you’ll first have to identify and address the habits that got you into debt in the first place.
Take an honest look at your spending habits to recognize where you can minimize your expenses. For example, you may be using your credit cards for shopping or for dining out.
Recognizing these areas will help you create a strict budget for shopping and dining out and minimize your credit card payments.
3. Switch to Cash and Open a Savings Account
Use your credit cards only for emergencies. For everything else, switch to cash or debt.
One of the best ways to do that is to leave credit cards at home when you go out. Pay for items with cash so you’ll spend more mindfully.
If you do this, you won’t be tempted to spend impulsively.
Furthermore, even if you believe you do not have enough money to save, putting aside just $10 per week will help you save money. If you stick with it, it will add up to $520 every year. To most individuals, this is a significant sum of money, and seeing your savings grow will encourage you to start putting in more each week. For example, if you start putting in $20 per week, you will have saved $1040 over the course of a year. This is key in rewiring your brain for a positive relationship with money.
4. Prioritize Your Debts
Make a list of all your credit card accounts along with information such as outstanding balances, interest rates, and charges. This will give you a better understanding of the total debt you owe and which debt is more important for you to pay off first.
Secured debt, such as mortgages and auto loans, should be a priority because you risk foreclosure and repossession if you fail to pay.
For many people, getting rid of the debt with the highest interest rate will make more sense. For others, getting rid of a specific credit card will make more sense.
The goal is to have a clear strategy in place that makes sense for your financial situation.
5. Debt Avalanche Method
This debt repayment method is one of the most effective ways to get out of debt. If you have multiple credit cards, maximize your payments on the highest-rate credit card. You can continue to make minimum payments on other credit cards.
Once you pay off the entire balance on that credit card, use that extra money to pay down the next highest interest rate credit card. This will help you not only pay down your debt faster but also help you save money.
6. Debt Snowball Method
Another effective debt repayment strategy is the debt snowball method which involves paying off the smallest balances first. Getting this quickly out of your way will have a positive psychological impact on you. It will encourage you to keep going.
Use all the extra funds you have to pay off your smallest balance first, regardless of the interest rate. Once you do that, start paying off the next smallest balance.
The goal is to pay it off as quickly as you can. Continue to repeat this process until you have paid off all your credit cards.
7. Consolidate Your Credit Cards
Debt consolidation is an effective strategy when you have multiple credit cards.
You can apply for a debt consolidation loan at a lower interest rate if you have a good credit score. A 0% balance transfer credit card is another option.
This new personal loan at a lower rate can be used to pay off your higher interest rate credit cards so you can save on interest charges. Having a single monthly payment will also make your debt easily manageable.
Compare the APRs, balance transfer fees, and loan terms offered by different financial institutions so you can find one with the lowest rates.
Once you pay off your debt consolidation loan, make sure that you don’t begin using your credit cards again. Keep them locked up, or cut them up until you can build a healthy relationship with spending and money management again.
8. Consider Debt Settlement
If you have over $10k in credit card debt, approach a debt relief company for debt settlement. A debt relief professional can negotiate with your credit card company to accept less than what you owe on your credit card balances.
This option is suitable if you are really struggling with paying off your debts, have missed payments or late fees, or have accounts in collections.
With debt settlement, you’ll be able to reduce the amount of debt you owe, pay off your debts faster, and save up to 50% of your total debt before fees.
9. Enroll in a Debt Management Program
You can also approach a credit counseling agency to see if you are eligible for a debt management program.
With a debt management program, your counselor can negotiate terms with your credit card issuer to reduce your credit card interest rates, set up a repayment plan, or waive fees.
A debt management plan will provide you with a clear path and fixed monthly debt payments to get out of your credit card debt.
If you are carrying very high debt and no other debt solutions seem to help, consider bankruptcy as a last resort.
You can file for chapter 7 or chapter 13 bankruptcy to wipe off all your unsecured debt.
Bankruptcy can get you out of credit card debt, but it also has serious consequences because it will stay on your credit report for up to 10 years.
It will also affect your ability to get new credit cards or loans during that time. While it is a drastic step, it may be the only available solution when your financial situation is dire.
Credit card debt will continue to multiply if you don’t tackle it at the earliest. Fortunately, these tips on how to pay off credit card debt faster can help you deal with it.
If you need help with your credit card debt, TurboDebt can help. With our counseling, consultation, and planning services, we can help you identify the right debt relief option for your needs. Connect with us today for a free consultation.
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