What’s the Best Way to Pay off Credit Card Debt?

If you’ve recently prioritized paying off your credit cards, you may be wondering what’s the best way to pay off credit card debt.

There are several ways you can go about it, but some strategies are better than others. Below are a few ways you can speed up the debt payoff process and get rid of credit card debt once and for all.

1. Inventory all your cards

Before you can formulate any plan at all, it is important to know exactly where you stand.

If you have multiple credit cards carrying a balance, here’s what you do. Write down the name of each card, the balance, and the interest rate on each of them. This will show you the best place to dedicate your efforts.

You also need to know where you stand in terms of how much you are able to allocate to debt repayment each month. Make a list of all of your income and expenses on a monthly basis. Your income minus your expenses are what you have to work with in terms of making additional debt payments.

If your expenses exceed your income, you will need to improve your cash flow by reducing your expenses, increasing your income, or both.

2. Consider a balance transfer

Granted, this strategy isn’t for everyone — especially those who have mediocre credit or are trying to avoid new credit altogether. But if you do have excellent credit and can qualify for a 0% balance transfer, it could be a solid option for cutting interest costs and paying off your credit card debt much faster.

Here’s why: When you carry a balance month-to-month, interest gets tacked on. Next month, you not only have to pay your balance, but also the interest that got added on. Can’t pay in full this month either? More interest gets added to the balance, and so on.

Interest charges can really set you back when you make any progress toward paying down debt. But you probably already knew that.

A balance transfer could help solve that problem. The idea is that if you transfer your credit card balance from your existing card to a new issuer, they’ll reward your new business with an introductory interest rate of 0%. Typically, that rate lasts from 12-18 months. Then the interest rate resets to what is standard for that particular card.

The key here is to pay down the balance before your time is up. Often, if you don’t pay off the entire balance prior to the expiration of the introductory rate, you’ll be charged the regular rate retroactively on the entire balance, not just your remaining balance.

Also keep an eye out for fees; only sign up for balance transfer offers that come with low or no fees for transferring the balance, as well as no annual fee. And most importantly: Don’t transfer a balance unless you are totally confident you’ll be able to pay off the balance completely before interest starts accruing.

3. Target your repayment efforts

If you don’t take the balance transfer route, you still have a few effective options to choose from. Consider, for example, the debt snowball or debt avalanche methods — two strategies for paying off debt fast.

Here’s how they work:

Debt avalanche: When following this debt repayment method, you want to focus your efforts on the credit card that is charging the highest interest rate first. Pay the minimum on all of your credit card balances except the card with the highest interest rate. Then dedicate any extra funds you have toward extra payments to this card.

Once you pay off your highest-interest balance, move on to the next highest (and continue to pay the minimums on the rest). Keep working your way down until all your cards are paid off.

The debt avalanche is the best way to pay off credit card debt that results in the most savings. Because you eliminate your high-interest debt first, you prevent balances from ballooning and mitigate future interest charges.

Debt snowball: Alternatively, you might decide to focus your efforts on the credit card with the lowest balance. This is known as the debt snowball.

Rather than making extra payments toward the credit card with the highest interest rate, you instead work on paying off the lowest balance. Once your smallest credit card balance is paid off, move on to the next-highest, and so on.

The debt snowball won’t save you money on interest like the debt avalanche method, but it’s the best way to pay off credit card debt if you have trouble staying motivated. By tackling smaller balances first, you can experience wins right away and stay pumped to keep going.

4. Consolidate credit card debt with a personal loan

Finally, consider taking out a personal loan. This is the best way to pay off credit card debt if you have a large balance with a high interest rate or several high-interest credit cards.

Consolidating credit card debt with a personal loan usually means cutting down the amount of interest you pay, since personal loans tend to have much lower rates than credit cards. Again, by lowering your interest rate, you free up more cash to pay towards the principal balance.

It’s a win-win: pay off your balance faster and save money in the process.

Another major benefit to using a personal loan to pay off credit card debt is that you go from a revolving line of credit to an installment loan. There’s no way to rack up new expenses (assuming you cut up all those old cards) and dig yourself back into a hole. Once the personal loan is paid off, you’re officially free from that debt.

Choosing the best way to pay off credit card debt

All of these methods are proven ways to knock out debt, but know that there’s no one best way to pay off credit card debt for every person. You’ll need to consider your entire financial situation before deciding on your plan of attack.

For instance, if you have other debt such as student loans or a car loan, you may want to factor the repayment of those loans into your overall plan.

And you don’t have to choose just one strategy, either. Often, these methods work best when used in combination. Plus, there are several more strategies you can try out.

Paying off credit card debt is a marathon, not a sprint — but you can still make great time. By creating a plan and focusing your efforts, you can make your credit card debt disappear fast.

Interested in a personal loan?

Here are the top personal loan lenders of 2018!
LenderRates (APR)Loan Amount 
1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Finance Lender Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)
  2. Personal Loans: Fixed rates from 5.49% APR to 14.24% APR (with AutoPay). Variable rates from 5.29% APR to 11.44% APR (with AutoPay). SoFi rate ranges are current as of December 1, 2017 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 5.29% APR assumes current 1-month LIBOR rate of 1.34% plus 4.20% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

2 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Personal Loan Rate Disclosure: Fixed interest rates range from 5.99% – 16.24% (5.99% – 16.24% APR) based on applicable terms and presence of a co-applicant. Lowest rates shown are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
  2. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  3. Automatic Payment Benefit: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.
7.39% - 29.99%$1,000 - $50,000Visit Upstart
5.29% - 14.24%1$5,000 - $100,000Visit SoFi
8.00% - 25.00%$5,000 - $35,000Visit Payoff
5.99% - 16.24%2$5,000 - $50,000Visit Citizens
5.99% - 35.89%$1,000 - $40,000Visit LendingClub
5.25% - 14.24%$2,000 - $50,000Visit Earnest
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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print, understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.