At a Glance
When you’re deep in credit card debt and making only minimum payments, it can feel like you’re destined to tread in the debt waters forever. But the good news is, even if you’re holding a significant amount of debt, there are helpful tips and resources that can get you closer to becoming debt-free. Here are 4 tricks to paying off credit cards faster.
1. Consolidate Credit Card Debt
If you’re currently managing multiple debts, credit card debt consolidation using a debt consolidation loan or balance transfer is something to consider. For those with higher-than-average credit scores, the interest rate on a debt consolidation loan or 0% balance transfer offer can provide significant savings on interest. Try using a debt consolidation calculator to figure out the true cost of your potential savings.
Plus, moving from managing multiple debt payments to a single payment each month helps to simplify the payment process dramatically, which is why this is one of the best tricks to paying off credit cards. Of course, there are pros and cons to consolidating credit card debt, but ultimately the process for how to consolidate credit card debt is relatively straightforward. Once you choose your consolidation method, like a loan or balance transfer credit card, all that’s left to do is apply, and then pay off your existing credit card debt using your new loan.
2. Choose a Payment Strategy and Stick to It
The 3 most common credit card payoff strategies are the debt snowball, the debt avalanche, and debt consolidation.
The debt snowball strategy focuses on aggressively paying the lowest balance loan first. This approach can lead to increased motivation by providing a quick win. With this approach (and the debt avalanche), you’ll continue to make minimum payments on all other debts while throwing any extra money at the loan you’re targeting.
The debt avalanche is quite similar to the snowball but instead focuses on first paying off the highest-interest debt. While this approach may not get you any quick wins, you’ll be saving the most money possible, which is plenty of motivation for some.
As mentioned above, debt consolidation is an excellent trick to paying off credit cards faster. Since you’ll only have a single payment each month, there’s no need for a snowball or avalanche. Instead, you can simply put all excess money directly toward your debt consolidation loan.
Keep in mind these 3 strategies can work in addition to or alongside numerous other debt reduction strategies that can help you pay off credit card debt (and other debt!) faster and more efficiently.
3. Make More Frequent Payments
Just because your credit card payment is due once a month doesn’t mean you can’t make payments more frequently. Planning for weekly payments instead of monthly is a tip that can help you pay off credit card debt fast. Plus, you can often pay more weekly than you may currently be paying per month.
For example, if your minimum monthly payment is $60 and that’s all you’re paying each month, it works out to $15 per week. But if you instead put $25 per week aside for credit card payments, you’d be paying $100 a month, which is an extra 66%, but making that higher payment is really only costing you an extra $10 a week!
4. Automate Payments
Automation isn’t such a trick for paying off credit cards as it is a necessity. Taking advantage of automated payments means you won’t risk missing a payment that can damage your credit score. It also forces you to stay consistent with your debt repayment strategy.
The Bottom Line
Paying off credit cards is a process that may take months or years, depending on how much debt you have. But using the tricks of consolidating debt, choosing a strategy and sticking with it, making more frequent payments, and automating them is sure to get you closer to your debt-free goals by allowing you to pay off credit cards faster.
Is it bad to pay off your credit card too early?
Paying off your credit card early will save you money in interest and may also help lower your credit utilization which can raise your credit score. So it’s rarely a bad idea to pay off your credit card early. In fact, paying it consistently on time and in full can only have positive implications for your credit score.
If I pay off my credit card in full, will my credit go up?
Paying off a credit card in full may have a positive impact on your credit score. One of the five factors that determine your credit score is the credit utilization ratio, which compares how much credit you’re using with how much you have available. By paying down a credit card balance, you’ll be lowering the amount of credit you’re using which helps your credit utilization score go down and may cause your credit to go up.
How to budget paying off credit cards ?
Paying off credit cards is worthy of a line item in your budget. It’s best to prioritize debt repayment as you would other monthly essentials. So that means it will need to be factored into your budget alongside items like rent and food. Ensuring your credit card payments are a top priority in your budget means you’ll always have enough money for them and won’t run the risk of hurting your credit score with missed payments.
Is paying off credit cards a good idea?
Paying off credit cards is a good idea when the interest rate or balance owed is high. High interest rates on credit cards may mean you’re paying unnecessary money in interest. And keeping a large balance relative to your available credit may be dinging your credit score due to a high level of credit utilization. In these instances, paying off credit cards is not only a good idea, but it can also provide you with a level of financial freedom you’ve been missing.