Four Strategies to Pay Off Credit Card Debt Faster

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Pay Off Credit Card Debt Faster
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At Student Loan Hero, we’re big on helping you pay off debt. But we know your debt may not be limited to just student loan debt. And with about $880.5 billion in outstanding credit credit debt, it rivals the roughly $1 trillion of student loan debt Americans hold.

In some ways, credit card debt is worse than student loan debt. Credit card interest rates are almost always higher than student loan interest rates. You also can’t deduct credit card interest on your tax return like you often can for student loan interest.

If you’re looking to change your payments while you pay off credit card debt, there’s no guaranteed relief like there is with federal student loan debt.

For paying off credit cards, the focus is typically on interest rates. Rates can be so high (over 20% APR) that you can be stuck with debt for years. If you pay only the minimum on a card with a $1,000 balance and 18% APR interest rate, it will take you 10 years to pay it off.

To pay off credit card debt, the first step is to decrease interest rates. Here are some proven strategies to pay off credit card debt faster by finding lower interest rates.

1. 0% credit card balance transfer

Pros: Will reduce the interest rate to 0% for a defined period.

Cons: A good to excellent credit score is generally required. Still have to pay transfer fees.

When you’re paying interest on a credit card it is likely to be at a high rate. Some cards exceed a 20% APR.

However, there is one way to keep your debt on credit cards and not pay interest, and that’s with 0% APR balance transfers.

Balance transfers often let you go 12 months or longer without paying interest. In the meantime, you’ll still have to make at least the minimum payments each month. Many companies charge a fee equal to 3-4% of the balance you’re transferring, so be sure to calculate this into any savings.

Another plus: there’s likely little to no paperwork to fill out. You can just fill out balance transfer checks and send them in. Many creditors now let you complete the process online.

2. Negotiate lower interest rates

Pros: It’s low risk, high reward. Takes little time.

Cons: Requires negotiation. Your creditor may or may not lower your rate.

Some credit cards users are able to call and negotiate directly with the credit card companies to lower their rates.

This won’t be easy, so if you want the chance to succeed, you need to go in with a plan. Ramit Sethi lays out a script for the negotiation, which he gives a 50% chance of success. His talking points include:

  • Asking directly to lower your APR (perhaps by 50%)
  • Pointing out how long you’ve been a customer, including if you’ve always made on-time payments, etc.
  • Leveraging other offers, including 0% balance transfer to other credit card companies

If this works, you can save a ton on interest with only five minutes worth of work.

3. Consolidate with peer-to-peer (P2P) lending

Pros: More people can potentially qualify.

Cons: Might not lower rate substantially.

P2P lending is a newcomer to the world of debt consolidation. The way it works is you request a loan through a P2P lending company, like Lending Club. Once you’re approved, it’s up to individual people to decide to loan you money.

Interest rates are as low as 6% APR if you have excellent credit, but can be much higher if you don’t.

This solution is much like debt consolidation from a bank, but you may have more luck qualifying if your credit isn’t so good. However, the interest rate you receive still depends on your credit rating. If you don’t have good credit, using P2P lending might not present big savings on interest compared to your current credit card interest rates.

If you have good credit and can get a lower interest rate, this could be a good deal.

4. Use a debt consolidation service

Pros: It’s simple — just repay your debt to the consolidation company

Cons: Must read and understand the fine print. Potential for scams.

Traditional debt consolidation is pretty easy concept to understand. The debt consolidation company agrees to pay off your credit card debt, and in exchange, you repay the debt consolidation company. It’s similar to student loan consolidation in the sense that you pay one bill instead of many.

However, before you sign on, you need to make sure you understand the terms. While the interest should be lower to make it a good deal, that’s not all you should look at. Make sure to check any other fees you might pay. And make sure the payments are realistic or you could have penalties if you miss payments.

No matter which option you choose, there’s no substitute for committing to paying down credit card debt rather than racking up more. Be sure to use the options above with a plan to pay off your debt instead of just enabling yourself to end up deeper in the hole.

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Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. 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 to help you understand what you are buying. Be sure to consult with 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.

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. 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 to help you understand what you are buying. Be sure to consult with 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.

RATES (APR)loan amount
5.99% – 17.88%1 $5,000 to $100,000
5.69% – 35.99% $1,000 to $50,000
6.98% – 35.89%* $1,000 to $50,000
99.00% – 199.00%2 $500 to $4,000
5.99% – 24.99%3 $5,000 to $35,000
5.99% – 29.99%4 $7,500 to $40,000
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1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Fixed rates from 5.99% APR to 17.88% APR (with AutoPay). Variable rates from 6.49% APR to 14.70% APR (with AutoPay). SoFi rate ranges are current as of November 4, 2019 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. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 6.49% APR assumes current 1-month LIBOR rate of 1.81% plus 3.08% 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. To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull.
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  3. Minimum Credit Score: Not all applicants who meet SoFi’s minimum credit score requirements are approved for a personal loan. In addition to meeting SoFi’s minimum eligibility criteria, applicants must also meet other credit and underwriting requirements to qualify.
  4. If you lose your job through no fault of your own, you may apply for Unemployment Protection. SoFi will suspend your monthly SoFi loan payments and provide job placement assistance during your forbearance period. Interest will continue to accrue and will be added to your principal balance at the end of each forbearance period, to the extent permitted by applicable law. Benefits are offered in three month increments, and capped at 12 months, in aggregate, over the life of the loan. To be eligible for this assistance you must provide proof that you have applied for and are eligible for unemployment compensation, and you must actively work with our Career Advisory Group to look for new employment. If the loan is co-signed the unemployment protection applies where both the borrower and cosigner lose their job and meet conditions.
  5. 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 Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)
2 Includes AutoPay discount. Important Disclosures for Opploans.

Opploans Disclosures

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Opploans currently operates in these states: . *Approval may take longer if additional verification documents are requested. Not all loan requests are approved. Approval and loan terms vary based on credit determination and state law. Applications processed and approved before 7:30 p.m. ET Monday-Friday are typically funded the next business day.

  1. To qualify, a borrower must (i) be a U.S. citizen or permanent resident; (ii) reside in a state where OppLoans operates; (iii) have direct deposit; (iv) meet income requirements; (v) be 18 years of age (19 in Alabama); and, (vi) meet verification standards.
  2. NV Residents: The use of high-interest loans services should be used for short-term financial needs only and not as a long-term financial solution. Customers with credit difficulties should seek credit counseling before entering into any loan transaction.

  3. OppLoans performs no credit checks through the three major credit bureaus Experian, Equifax, or TransUnion. Applicants’ credit scores are provided by Clarity Services, Inc., a credit reporting agency.

  4. Based on customer service ratings on Google and Facebook. Testimonials reflect the individual’s opinion and may not be illustrative of all individual experiences with OppLoans. Check loan reviews.

  5.  

    Rates and terms vary by state.

3 Includes AutoPay discount. Important Disclosures for Payoff.

Payoff Disclosures

  1. All loans are subject to credit review and approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage and history. Currently loans are not offered in: MA, MS, NE, NV, OH, and WV.
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FreedomPlus Disclosures

  1. All loans available through FreedomPlus.com are made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender. All loan and rate terms are subject to eligibility restrictions, application review, credit score, loan amount, loan term, lender approval, and credit usage and history. Eligibility for a loan is not guaranteed. Loans are not available to residents of all states – please call a FreedomPlus representative for further details. The following limitations, in addition to others, shall apply: FreedomPlus does not arrange loans in: (i) Arizona under $10,500; (ii) Massachusetts under $6,500, (iii) Ohio under $5,500, and (iv) Georgia under $3,500. Repayment periods range from 24 to 60 months. The range of APRs on loans made available through FreedomPlus is 5.99% to a maximum of 29.99%. APR. The APR calculation includes all applicable fees, including the loan origination fee. For Example, a four year $20,000 loan with an interest rate of 15.49% and corresponding APR of 18.34% would have an estimated monthly payment of $561.60 and a total cost payable of $7,948.13. To qualify for a 5.99% APR loan, a borrower will need excellent credit on a loan for an amount less than $12,000.00, and with a term equal to 24 months. Adding a co-borrower with sufficient income; using at least eighty-five percent (85%) of the loan proceeds to directly pay off qualifying existing debt; or showing proof of sufficient retirement savings, could help you also qualify for the lowest rate available.
* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

* Personal loans made through Upgrade feature APRs of 6.98%-35.89%. All personal loans have a 1.5% to 6% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Personal loans issued by WebBank, Member FDIC.

** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.

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