The Ultimate Guide to Paying Off Credit Card Debt Faster

how to get rid of credit card debt

If your credit card balance is uncomfortably high and climbing, you’re not alone. Just under 40 percent of US households carry credit card debt, with an average balance of $5,700.

But while carrying a credit card balance is common, it has a high cost. If you’re worried about your credit card debt, you’re probably already feeling the financial strain.

That means it’s time to figure out how to get rid of credit card debt. This guide will help you find the fastest way to pay off credit cards, save on interest, and get debt-free — fast.

Why credit card debt is harder to get rid of

There are a couple unique features that can make credit card debt particularly costly and tricky to pay off.

The biggest? The high interest rates credit cards usually carry. Typically, credit card rates are higher than most other forms of debt. Borrowing with a credit card will cost you more than borrowing through a loan.

Credit cards have an average rate of around 16.31%, according to Bankrate. But it’s also fairly typical for rates to be upwards of 20% for rewards credit cards or borrowers with less-than-excellent credit.

In addition, minimum payments for credit cards are often well below what you’d need to pay to pay off the debt quickly. Most credit card issuers require high-balance borrowers to only pay 1% of their total balance (plus accrued interest and fees) each month.

The high interest rate and low monthly payments combine to make credit card debt much more expensive than other debts. That’s why it’s so important for borrowers to figure out how to pay off credit card debt fast.

How to get rid of credit card debt in 4 steps

Beyond paying the minimums on your credit cards, it can be tricky to figure out how to get rid of credit card debt. These four steps are a good starting point for almost any credit card borrower.

Read on to figure out how much credit card debt you owe and how fast you can afford to pay it back.

Step 1: Stop adding to your credit card debt

Here’s the first and most important step in learning how to get rid of credit card debt: Stop charging purchases to your credit card. You won’t ever dig your way out of credit card debt while you’re still adding to your balance.

If you’re an impulse spender, it can help to remove the temptation. Take your credit cards out of your wallet and leave them at home.

For online shopaholics, it can help to delete saved credit card information from online accounts. Some people even freeze their credit cards in a block of ice to make it more difficult to use them! Do whatever you need to do to stop using your cards.

It can also help to switch out credit cards for a form of payment that’s easier to track.

Many people find it easier to manage their spending and resist unnecessary purchases if they replace credit cards with cash, but switching to a debit card with the hard limit of your checking account balance can be effective, too.

Step 2: Get your credit card details

When tackling credit card debts, you’ll need complete information about each of your credit accounts. Knowing how much you actually owe will help you find how to pay off credit cards faster.

Pull out each of your credit cards and sign into your corresponding account online. For each card, write down this information:

  • Current card balance
  • Credit card interest rate
  • Minimum monthly payment
  • Credit limit

Add up the total balances to find out the total you owe. It can be scary to face up to your credit card debt, but it’s a necessary step. Knowing how much you actually owe can be motivating to stop charging and get serious about getting rid of it.

After you know how much you owe, it’s time to look at your monthly budget and figure out how fast you can pay down credit card debt.

Step 3: Figure out your monthly budget

The fastest way to pay off credit cards is to put as much extra money toward this debt as you can afford.

How do you know what you can afford to put toward credit card debt? This will largely depend on your discretionary income, or how much of your paycheck is left over after paying for basic living expenses each month.

To figure this out, you’ll need to track your expenses. Review the past few months of your budget and add up what you’ve spent on basics like rent, food, or minimum debt payments. Subtract this amount from your total take-home pay and you’ll have your discretionary income.

This is the amount you could be putting toward paying off credit card debts faster if you’re willing to cut spending on non-necessities. This could include shopping for apparel, going out to eat all the time, or overspending on nights out with friends.

Whatever your non-essential expense, consider lowering it or cutting it out altogether — at least until your debts are paid off. This will give you some much-needed room in your budget to use your discretionary income to target credit card debt, instead.

You know how much credit card debt you have and how much discretionary income you have toward extra credit card payments. Now, you’ll need to decide how to most effectively use your extra credit card payments.

Step 4: Decide on your strategy

There are usually two main debt repayment strategies that experts recommend: the debt avalanche and the debt snowball.

These strategies are similar; while you make minimum payments toward all of your debts, you use your extra payment to target one balance until it’s paid off.

After that one balance is eliminated, you no longer have to make payments on it. You can then use the extra payment plus the minimum payment on the next debt you want to target. You continue doing so until the debt is completely eliminated.

The debt snowball and debt avalanche methods differ, however, in how you choose which debts to target first.

With the debt snowball, you start by tackling the credit card with the smallest balance. This helps you pay off one of your debts fast, which can give you a win when you need it. The debt snowball can be a smart choice if you’re motivated by these successes, or if you have debts with widely varied balances.

However, the fastest way to pay off credit cards is actually through the debt avalanche, which targets the debt with the biggest interest rate first. The debt with the biggest rate is also the one that’s growing the fastest and costing you the most.

It makes sense, then, to pay it off the fastest and lower the balance on which you’re getting charged interest.

How to lower your credit card rates

As you start paying more toward your credit cards and work toward paying them off faster, your efforts will go further if you can secure a lower credit card interest rate. Here are some methods to try to get a lower rate on credit card debts.

0% credit card balance transfer

There are several credit cards that let new account holders go 12 months or longer without paying interest. You can transfer a credit card balance from a high-interest card to the 0% account to save on interest.

Through a balance transfer, you can use the new 0% credit card to pay off debts from other credit cards, up to the new card’s credit limit. You simply fill out a balance transfer check from your new card and send it as payment to your other card.

To maximize your savings, transfer your debt with the highest interest rate first. You will also want to make sure you can pay off the balance before the 0% interest rate expires.

Additionally, watch out for balance transfer fees. The best cards are those with a 0% introductory rate and no balance transfer fee. For those that do charge a fee, it tends to be 3 to 4%. If necessary, be sure to include that number in your math.

It usually takes a good to excellent credit score to qualify for 0% credit card offers. If you have fair or poor credit, this might not be an option for you.

Ask for a lower credit card rate

If a balance transfer isn’t an option for you, you can always see if your credit card issuer will lower your interest rate. With a simple call, you can ask for a lower credit card rate.

More often than not, credit card companies will grant a customer’s request to lower their interest rate, but it helps to have some leverage.

If you’ve been a long-time customer with an impeccable payment history, make sure to mention that. If you have a good credit score and history, this will also work in your favor.

Consolidate credit card debt

You might also consider consolidating your credit card debt with a personal loan. Through this process, you will get a new loan and use it to pay off your credit card debt. Consolidating your debts can have a few benefits.

  • Lower interest rates: Depending on your creditworthiness and the lenders you check out, your personal loan rates might be lower than your credit card rates.
  • Fixed rate: Credit cards have variable rates, which means your credit card issuer can raise the rate at any time. With a personal loan, you can secure a fixed rate that will never go up.
  • Set payoff date: Personal loans have a set repayment period. You know exactly what your payment will be each month and when your debt will be gone.
  • Combine credit card debts: Instead of keeping track of different credit card balances, you’ll have a single loan balance and payment. This makes repayment simpler. It can also lower your credit utilization, which can improve your credit.

If consolidating your credit card debt sounds promising, shop around for a lender that will offer a good deal for you. The best personal lenders offer options for a range of borrowers and credit histories.

Make sure to pay attention to both interest rates and fees, like loan origination fees, when comparing lenders’ offers.

More ideas for how to pay off credit cards faster

On top of the strategies listed so far, there are additional actions you can take to get rid of credit card debt faster. In the process, you’ll save even more on interest. Here are some ideas to find more funds to put toward this debt.

Use extra money to pay down credit card balances

In addition to the money you’re putting toward paying off debt, you should also watch out for extra funds that can be applied to pay down debt faster.

A tax refund, for example, is often a large sum outside of your usual take-home pay. Use this tax refund to make an extra payment toward a credit card — or even pay it off. It’s a fast, easy way to take a big chunk out of your debt.

Other sources of extra money could be raises, overtime pay, bonuses, or cash gifts. You can even get a second job or side gig to generate more income to put toward credit card debts.

Return or resell items to repay credit cards

If you racked up credit card debt by buying stuff, you could try returning or reselling some items to get your money back.

If you’re just starting your credit card repayment journey, return as many of your most recent purchases as you can. Often these funds are returned directly to your credit card account, helping to lower your debt.

If it’s been a while since you made the purchase, you can try to resell the item to recoup some of those funds. There’s always Craiglist, local listing sites, or eBay. You can also see what local consignment stores will offer you.

Make half-payments every two weeks

Instead of paying monthly, try splitting monthly payments in half and paying every two weeks instead of monthly. At the end of the year, you’ll have made 26 payments, equal to a month’s worth of extra money. It’s a painless way to put a little extra toward credit card debt.

Stay focused on your goal

Cutting back and making sacrifices to pay off credit cards won’t be easy, so find ways to stay motivated and focused on your goal.

Do you want to be able to start saving for a vacation? Putting more toward paying off student loans? Saving for a house? Maybe simply being free of the stress and financial burden of credit card debt is reward enough.

Put a reminder in your wallet, or even on your credit card, to remind you of the reasons you’re getting out of debt.

Make sure you also take some time to celebrate what you accomplish as you work toward paying off credit cards. Don’t be afraid to get yourself an affordable treat here and there, especially to celebrate a debt win (like knocking out another $1,000).

By enacting these tips, you can learn how to pay off credit card debt fast. Start today, and there’s no telling where you could be a year from now.

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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: Variable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of August 1, 2017, the one-month LIBOR rate is 1.23%. Variable interest rates range from 6.02% – 15.97% (6.02% – 15.97% APR) and will fluctuate over the term of your loan with changes in the LIBOR rate, and will vary based on applicable terms and presence of a co-applicant. 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 Citizens Bank 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, Citizens Bank 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 student loans owned by Citizens Bank, N.A. 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. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three 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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