How to Pay Off Credit Card Debt Quickly

Woman sitting next to dog holding a credit card and looking at her laptop.

Disclaimer: Upstart is not a financial advisor. The following content is for informational purposes only.

If you’re in debt, you’re most definitely not alone. Credit cards, student loans, and car loans often sink thousands of people into debt. When you realize you’ve taken on more debt than you can handle, it can feel like an impossible feat to pay it off, especially when you’re trying to make big life plans.

No matter the amount of credit card debt, whether it’s $500 or $150,000, you don’t have to settle for the status quo. With a little preparation, confidence, and focus on the future, you can make your debt a thing of the past. 

If you’re wondering how to pay off credit card debt fast, we’ve got 4 strategies to help you start tackling your debt, one dollar at a time.

1. Review your spending habits

Facing debt head-on is a daunting task, but burying your head in the sand and pretending that it doesn’t exist isn’t going to make it go away. To help you avoid overspending in the future and sinking further into debt, it is important to understand how you got into the debt in the first place. Once you have a better handle on where you went astray to begin with, you’ll have a better understanding of how to best stay off the debt path in the future—while developing better spending habits.

To start, study your credit card statements from the last few months to identify patterns in your spending. Then, find small adjustments you can make to your daily or monthly spending, such as canceling an expensive gym membership you may no longer use but still pay for. 

But what if you realize that your credit card debt was from a large unexpected expense? Like when a pet needed emergency surgery, or you had to fix a massive leak in your kitchen? In those cases, you’ll want to consider creating a budget with space for building an emergency fund to help you pay for big, sudden bills in the future.

To help you start saving more than you’re spending without giving up everything you love, create a realistic budget that accounts for the following:

  • Essentials: Rent and/or mortgage, utilities, groceries, and gas
  • Obligations: Payments on credit cards and other debt
  • Extras: Restaurants, coffee, travel, and entertainment costs
  • Repetitive expenses: Insurance, car repairs, gym membership, haircuts, toiletries, vet bills, weddings, and gifts

After you list all your expenses, review each item and think strategically about where you can free up money each month to help you start paying down your debts and even saving at the same time.

2. Pay a little extra

When it comes to paying down credit card debt, every little bit helps. Even if you contribute just a few extra dollars to your debt payments, it can make a big difference in the long run. If you feel you can comfortably pay a little extra to your debt, there are two different routes you can take. (Bonus: You can use both methods at the same time!)

Pay more than the minimum 

As you may be aware by now, each credit card statement gives you payment options: pay the full balance, pay the minimum balance, or pay a different amount. While it might be nice at the moment to opt for the minimum payment and to put off making bigger payments for later, it can take you much longer to pay off your bill. By making bigger payments now (as in paying more than the minimum each time), you’ll also benefit from paying less in interest altogether.

Make an extra monthly payment

Interest compounds daily on unpaid debts. That means every day you wait to make a payment, you’ll have to pay more in interest charges. Luckily, you don’t need to wait until your monthly billing statement comes through to pay down a portion of your balance, and you aren’t limited to making just one payment per month. 

If you’re paid every two weeks, you could strive to make two payments a month or, if you get paid each week, you could get started on your debt management by paying weekly. If you opt for this method, ensure that the amount you pay toward the debt in advance at least covers the minimum payment by the time your credit card statement is due. Why? If you don’t meet the minimum, you will be charged a late fee and penalty. 

Pro tip: Paying down your debt quickly can possibly help improve your credit score by lowering your credit utilization ratio (the amount you spend in relation to your credit limit). Why should you care? It can make it easier for you to qualify for a balance transfer credit card.

3. Consolidate debt

Consolidating your debt can provide you with the chance to combine several high interest balances together into a single loan at a lower rate. Not only can it help you pay down your debt faster, but it can help you do so without increasing your payment amount. Best of all, there are two options: balance transfer credit card or home equity (if you’re a homeowner).

Balance transfer credit card

With a balance transfer credit card, you can combine balances from one or several accounts onto a different card. If you’re approved by the lender, this option can help you save money since these types of credit cards usually have a lower interest rate for a limited time after you open the account. Be aware that the interest rate will increase once the intro period is over, so you need to make sure you can pay off the balance within that period of time.

Tap into your home equity

If you’re a homeowner, you can consolidate your debt into a home equity loan. If you’re offered a lower loan rate than your credit card rate, this option will help you streamline your payments and save you money. Even though closing costs may cut into initial savings you may get, you can still save money, since home equity interest payments are usually tax deductible.

4. Focus on one debt at a time

If you have an outstanding balance on more than one credit card, you may need to at least pay the minimum on each card. Once you’ve done that, you can work on paying down the rest of the balance one card at a time using one of two methods: the avalanche method or the snowball method.

Both strategies can work for most types of debt including, personal loans, student loans, auto loans and credit card balances. The only debt they don’t work with—and you shouldn’t attempt it—is mortgage repayments. Both methods will require you to list out all of your debts and make minimum payments on each of them–except for one. 

The idea is that you take the one you decided not to make the minimum payment on, and you put extra money towards it until the debt is settled. After you’re done paying it off, you repeat the process, but you select another balance to pay extra money toward. The difference between these two methods is which debt you decide to tackle first. Let’s take a closer look at these two methods.

The debt avalanche method

With the debt avalanche method, you focus on settling the debts with the highest interest rates first. To start, you need to list your debts from highest interest to lowest interest and then make the minimum payments on debts with the lowest interest first. Then, after you finish paying the minimums, you use any extra money you have to pay down the debt with the highest interest rate. 

With time, you will pay off your debts with higher interest rates and you can “avalanche” the money you had been using to pay off the previous debts toward the debt with the next highest rate. You repeat this process until you’re done paying off all of your debts. 

Out of the two strategies, this one can help you save the most on interest since it requires you to tackle debts with the highest interest first.

The snowball method

The snowball method employs the same process of paying down debt, except you start with debt that has the lowest balance first. When you pay off the first “easy” debt in full, then you target the next smallest debt and repeat the process until you’re done paying off all of your debts. You may end up having more money to pay toward the next debt because you just paid off the first one. Your payment “snowballs” into larger payments each time you pay off a bill.

The biggest downside of the snowball method is that it can cost you more. By focusing on debts with lower balances rather than debts with higher interest rates first, you could possibly end up paying more money in interest. Additionally, paying off all of your debts can take more time with this method too depending on the types of debt you have and how much the interest compounds. The advantage is that you can start small and grow the payments as you go.

Next steps: reducing your debt once and for all

Just by reading this article, you’ve already started your journey to kick your debt to the curb. To put words into action, you may need to:

  1. Be patient with yourself
  2. Select the best way to pay off credit card debt for your needs
  3. Create a budget
  4. Track your accounts closely 
  5. Opt for cash or debit cards until you’re done paying down all of your debts 

Getting started and taking that first step may be the hardest part. If you stumble in the beginning of your financial wellness journey, don’t stress, it’s common. Just take it one step at a time. Once you’re at the point in your journey where you’ve reached the top of the hill, you’ll find yourself on a path to no-debt money freedom.

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