How To Pay Off Credit Card Debt Fast

How To Pay Off Credit Card Debt Fast – Revolving lines of credit, like credit cards, are useful tools when used responsibly. But accumulating credit card debt can lead to a slippery slope. Getting out of credit card debt isn’t as easy as snapping your fingers and hoping it goes away, but there are some strategies that can help you pay off your debt faster.

This may seem like an obvious first step, but it is very important. If you make more purchases on your credit card, your total debt will increase. If you’re already rolling over your account balance to the next month, it’s a sign that you’re already spending more money than you can pay back.

How To Pay Off Credit Card Debt Fast

Keep your credit cards out of reach by clipping them or putting them in a hard-to-reach drawer.

How To Pay Off Credit Card Debt Fast

We have mentioned our debt avalanche strategy several times here at the Gym. It works by prioritizing the highest credit card interest rates first. You want to dedicate as much of your financial resources as possible to paying off your balance with minimal payments on all other debt. Once your first bill is paid, transfer the money you used to pay the bill to the next higher APR card.

Paying off the highest APR cards first will save you money in the long run by reducing high interest rates.

This is another debt settlement approach that relies on “instant payments” to help you get out of credit card debt faster. Following this strategy will result in higher payments on your credit card bill.

The idea is that you want to pay off the balance on this account faster so you can maintain momentum to pay off the next larger balance. It won’t save you as much interest compared to an avalanche of debt, but it will motivate you to stick with your debt-free goal.

How To Pay Off Credit Card Debt And Be Free Of Your Financial Burdens

Applying for a 0% APR credit card balance transfer can be an effective debt repayment option. If you have good credit, you may have seen offers to transfer your existing card balance to a new interest-free credit card.

However, there is a caveat. The 0% interest rate is just a promotional rate that expires from 3 months to 24 months or more after opening the new card, depending on the offer. These offers also often charge a balance transfer fee of around 3% of the transfer amount or a flat fee (whichever is higher). Always calculate the potential savings after adding these fees to determine if it’s worth it.

A debt consolidation loan is a simple personal loan that can be used as a way to pay off a revolving debt balance. Once you have received the loan funds, you will use them to pay off your credit card debt in one go. Once you have paid off your loan debt, you will make monthly payments on your consolidation loan.

The advantage of this option is that you may be approved for a lower interest rate depending on your credit score. You can find a debt consolidation loan through a bank, credit union or online lender. If you are seriously considering this option, compare several offers and choose the lowest interest rate offer and terms.

Can You Pay Off A Credit Card With Another Credit Card?

Another option is to contact your card issuer and ask for a lower interest rate to find out how you can pay off your credit card debt faster. This strategy will not reduce the principal charged to your account, but it will reduce the impact of high APR fees on your account.

Getting out of credit card debt can require the use of a variety of strategies, and this is one of them. If you have good credit and your accounts are in good standing (for example, you’ve never been late or missed a payment), you can reduce the cost of your debt with just a two-minute call to your credit card company.

Want to know more about how you can pay off your credit card debt faster based on your unique situation? A financial coach can help you create a customized budget and credit card repayment plan. Our trainers are certified through The Gym’s own curriculum and can help you directly with virtual financial education.

Debt settlement programs are for-profit services provided by organizations that work directly with creditors to reduce debt and settle accounts permanently. For example, if you owe $9,000, try negotiating a lump sum of $6,000 with your creditor.

Methods To Pay Off Debt Fast (dec. 2023)

These companies encourage you to stop paying your credit card debt. Instead, ask for the payment to be sent to an account that the company has access to. Once the business is successfully wound up, the funds in the account are used to pay the lender.

The list above is just a few ways to get out of credit card debt. Not all strategies are ideal for your particular situation, and paying off credit card debt can be complicated to navigate. If you want one-on-one support, a financial coach can help you work out a debt strategy that’s best for you. In general, you cannot pay off the entire balance on one credit card from another unless you transfer the debt from one card to another. In a process known as a balance transfer. This may work in some financial situations, but it is not true for everyone. Moving debt from one credit card to another may not be a good idea for your unique financial situation, so you should consider your options and consider other ways to pay off your credit card balance yourself.

In this post, we discuss whether you can pay off one credit card with another and present other options for paying off credit card debt.

In some cases, you may be able to pay one credit card for another through a balance transfer. Balance transfers allow cardholders to move an outstanding balance from one credit card to another, often for a fee.

Tips To Pay Off Credit Card Debt Fast

Credit card issuers often offer new credit card introductory periods that include interest-free balance transfers with a low annual percentage rate (APR). This allows you to consolidate your company’s debts into one account.

This provides an indirect way of paying one credit card for another, but carefully consider the terms before choosing this route. The introductory period is limited and after the period you can pay higher interest rates.

Credit card companies usually require you to meet certain criteria for a balance transfer, including a good credit rating. If you have bad credit, it can be difficult to qualify.

Additionally, your approved credit limit may not cover the amount you have. Since each lender has different requirements and terms, it’s a good idea to shop around and review the terms and conditions of several credit card issuers before applying for a balance transfer card.[2]

How To Get Out Of Credit Card Debt?

You need to do the math to see if a balance transfer will save you money in the long run.

Let’s say your current credit card has a 20% APR, a balance of $2,500, and a monthly payment of $250. It will take you 12 months to pay off the debt, and you will pay a total of $2,758, including $258 in interest and fees.

Let’s say your new balance transfer card has a 5% APR (assuming the initial 0% APR ends in 12 months), includes a 5% balance transfer fee, and you pay $250 a month. It will take 11 months to pay off the debt through a balance transfer and you will pay a total of $2,625.

If this is the case, you may find it worth the time and effort to transfer your balance to a new card. This calculation also assumes that the new card has no annual fee and that the new card’s APR lasts 12 months. Initial balance transfer periods can only last up to 6 months, so factor that into your calculations.

Strategies To Pay Off Credit Card Debt Fast

Cards and issuers vary in approval requirements and credit limits, so find the balance transfer credit card that best suits your situation. Forbes’ Balance Transfer Calculator can help you compare your options.

You may be tempted to take out a cash advance on another card to pay off your debt, but these cash advances often come with high fees.

In addition to ATM fees and cash advance fees, you may pay a higher APR for cash advances than for regular purchases. Cash advances can add to your debt, so don’t use them except as a last resort in a financial emergency.[5]

Instead of opting for a balance transfer or cash advance, consider other methods to help you organize your personal finances.

How To Pay Off Your Credit Card Debt Fast

If you have debt that you don’t think you can handle on your own, using the following services can help you regain control of your finances.

If you have good credit, you may consider taking out a personal loan to pay off your credit card debt. This idea is perfect if you want to get a personal loan with a lower interest rate than a credit card.

But if you don’t manage your finances responsibly, you can end up in even more debt. Personal loans may also require additional fees.

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